- Vodafone Spain and Telefonica have entered into a non-binding term sheet to establish a joint fibre network company known as FibreCo.
- The FibreCo deal is poised to set a precedent for sustainable development within the telecommunications sector, encouraging energy conservation and the uptake of advanced technologies.
OUR TAKE
Recently, Spain’s two telecoms giants, Vodafone Spain and Telefónica, announced a major partnership plan to establish a joint fibre-optic network company called FibreCo. This initiative not only signals a strong commitment by both parties to improve network coverage and quality of service, but also marks a significant step towards building a nationwide high-speed fibre optic network in Spain. Through this partnership, it is expected to provide more reliable and efficient Internet services to millions of homes and businesses, while setting a new benchmark for sustainable development in the entire telecommunications industry.
–Elodie Qian, BTW reporter
What happened
Vodafone Spain and Telefonica have entered into a non-binding term sheet to establish a joint fibre network company known as FibreCo.
This new venture is expected to cover around 3.5 million premises in Spain. It is anticipated that Telefonica will hold the majority of the shares, while Zegona Communications plc will retain a 10% stake.
Vodafone Spain and Telefonica engaged in exclusive negotiations to agree on final terms. They intend to include financial investors in the capital of the new entity subject to regulatory approvals, which is expected to be completed in early 2025.
FibreCo is designed to offer fibre access services to both Vodafone Spain and Telefonica within its designated areas. The initial distribution of ownership will be determined by the number of customers each company has in the areas covered by the network.
The parties are considering the introduction of a third-party financial investor into the share capital of FibreCo. This move is expected to maintain Telefonica’s majority stake and Zegona’s 10% share.
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Why it’s important
The new company will provide fibre services, both retail and wholesale, to Telefónica Spain and Vodafone Spain, which was acquired by Zegona. It is expected to have 1.4 million customers, equivalent to a 40% conversion rate.
For Telefónica, this will be a way of assessing the value of its available network, while Vodafone continues to look for ways in the agreement to expand its footprint and remain competitive as the local market changes.
The establishment of FibreCo, along with Telefonica’s current coverage of 3.5 million premises and the recently announced MasOrange FibreCo1, which covers an additional 11.5 million premises, will provide Vodafone Spain with cost-effective access to a broad range of all-fibre networks across the nation.
Eamonn O’Hare, Chairman and CEO of Zegona, commented, “Creating a new FibreCo in partnership with Telefonica is another key milestone in our plan to transform Vodafone Spain. This transaction fully complements the MasOrange FibreCo we announced last week and gives Vodafone Spain guaranteed access to future-proof networks with attractive economics.
“Moving Vodafone Spain to these new FibreCo structures is expected to create significant incremental value for all Zegona stakeholders.”
The FibreCo deal is poised to set a precedent for sustainable development within the telecommunications sector, encouraging energy conservation and the uptake of advanced technologies. The transaction is contingent upon final agreements between the parties and the requisite regulatory approvals.
