Vodafone, Altice Forge €7 billion German fiber collaboration

  • Vodafone Plc Group (NASDAQ: VOD) and Altice created a joint venture (FibreCo) to roll out fiber to the home (FTTH) to 7 million homes over six years.

  • FibreCo plans to invest up to 7 billion euros, which will probably be 70% financed by debt.

  • Patrick Drahi’s 50-50 fiber optic venture with French billionaire Altice will build fiber optic lines to up to 7 million homes in Germany.

  • The deal will likely be completed in the first half of next year.

  • Vodafone is likely to receive cash proceeds from Altice of up to €1.2 billion, comprising an upfront payment of €120 million at closing, additional deferred payments of up to €487 million and earn-out up to 595 million euros.

  • Around 80% of the proposed network will focus on significant housing associations within Vodafone’s current footprint, with the remainder focusing on neighboring homes.

  • It will sell wholesale access to competing telecommunications providers.

  • Vodafone CEO Nick Read commented: “This significant infrastructure investment supports the social, economic and digital development of the country and the German government‘s broadband ambitions as part of the goals of the European Digital Decade.

  • Altice co-CEO David Drahi commented, “We pioneered fiber joint ventures in France and Portugal and are therefore delighted to be able to replicate such a feat in Germany with such a partner.”

  • Germany has become Vodafone’s biggest market after buying cable operator Unitymedia and other units for 18.4 billion euros in 2019, Bloomberg reports.

  • In October, Vodafone confirmed discussions with CK Hutchison Holdings LTD (OTC: CKHUF) on a possible combination of their UK operations.

  • The deal would involve combining Vodafone UK and Three UK, with Vodafone owning 51% and CK Hutchison owning 49% of the new unit.

  • The UK government rightly sees 5G as transformative for the economy and society and essential for the country to become more competitive in an increasingly digital world.

  • Price Action: Shares of VOD traded up 2.32% to $11.48 pre-market when last checked on Monday.

  • Photo via company

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James R. Rhodes