GIC, MasOrange, Vodafone Spain to create fiber Optic company

Singapore’s wealth fund GIC along with MasOrange and Vodafone Spain, on Monday signed an agreement to create an innovative fiber optic company (FiberCo) in Spain. Under the agreement, the parties will hold the following approximate stakes in FibreCo: MasOrange 58%, Vodafone Spain 17%, and GIC 25%.

MasOrange and Vodafone Spain will contribute approximately 12 million premises and 5 million customers to the new joint fibre network company. The network will be dedicated exclusively to MasOrange and Vodafone. MasOrange and Vodafone will also maintain and operate the networks they have respectively contributed to the FibreCo.

MasOrange CEO Meinrad Spenger said that GIC was chosen following a competitive process involving nearly 20 interested investors. This venture will provide their customers with the best premium FTTH connectivity and assure future technology upgrades, he said.

José Miguel García, first executive of Vodafone Spain, said that they continue to take steps in their strategy to transform Vodafone Spain into a more competitive, efficient and growing company. This agreement is a relevant milestone in Vodafone Spain’s plan, since it will guarantee customers access to fibre optic networks and better service.

Boon Chin Hau, Chief Investment Officer, Infrastructure at GIC, said that Spain is one of the most advanced European countries in terms of its Fibre to the Home rollout, however there remains significant fixed broadband penetration growth potential.

“In addition, the FibreCo has been designed to offer best in class service quality to customers whilst offering robust core infrastructure characteristics to investors,” Hau added.

The proposed transaction is subject to regulatory approvals. The closing of the transaction is expected in Q4.

Benefits Aplenty

The fibre network is set to deliver substantial advantages for customers of both operators. This infrastructure will help to further develop Spain’s connectivity and digitalisation, providing the operators with a leading FTTH network, enable operational efficiencies and creating the base for continued network and service improvements.

This new FibreCo, thanks to its increased scale and two solid tenants, operational efficiencies and investment capacity, will facilitate rapid adoption of cutting-edge technologies by incorporating emerging improvements in the fibre market such as XGSPON, while stimulating innovation to provide best in class service quality in Spain.

Financing and use of proceeds

The joint venture has successfully secured its financing at attractive terms, reflecting the strong confidence and commitment of both its shareholders and financial partners.

FibreCo will have a very efficient capital structure with over $5.7 billion of net debt. The majority of the debt raised will be investment grade, both underscoring its robust credit profile and positive outlook for the Spanish market. Circa 20 global banks have participated in the financing, demonstrating phenomenal support from lenders’ pool.

As part of the transaction, MasOrange will purchase Conexus Networks, the wholesale FTTH access provider in the North of Spain and contribute it to FiberCo.

As committed by MasOrange, $4.7 billion net proceeds from FiberCo’s transaction will be fully allocated to debt repayment at MasOrange level ensuring strong deleveraging in line with the Group’s tightened mid-term leverage target of 2.75x, as FiberCo will be fully deconsolidated from MasOrange accounts.