Telefonica is standing up a new fiber unit in Spain to help it cover 5 million rural locations there over the coming years, and said it is shopping a significant minority stake in the business to potential investors.
Speaking during an earnings call, Telefonica COO Angel Vila said the new unit is being launched jointly by Telefonica Spain and Telefonica Infrastructure. The new FiberCo will initially include a brownfield network contribution from Telefonica and from there will seek to expand to 5 million new locations via greenfield builds. Deployments will focus on low-density areas of the country and Telefonica Spain will serve as the anchor customer on the new company’s network.
“We are doing this because we think it's what would create the most attractive project for Telefónica and for potential investors,” Vila explained. He noted that there is a low risk of competition from overbuilders in the unserved areas it is targeting, which should help the FiberCo achieve higher uptake of its services. Additionally, the FiberCo’s rural focus will make its projects “eligible for fiber subsidies from the European Fund and others,” Vila said.
Telefonica is already deeply involved in fiber rollouts in Europe via joint ventures in the U.K. and Germany, and also holds stakes in various fiber cos in Chile, Colombia and Brazil.
U.K. fiber
Virgin Media O2, the 50-50 JV in the U.K. Telefonica launched with Liberty Global in June, reported earnings last week. The company added 60,000 broadband customers in Q4 and 177,000 for the full year 2021.
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The operator previously announced a plan to upgrade its entire network to fiber, including its 14.3 million cable premises. During earnings, Virgin Media O2 CEO Lutz Schüler revealed Telefonica and Liberty Global were working to set up a new fiber JV in the country which would extend VO2’s footprint to a total of around 23 million locations.
Vila said the new U.K. JV will aim to deliver fiber to 7 million greenfield homes outside of its current footprint in the country by the end of 2027. He added all of its JVs are “aiming for growth and investing in areas that are still uninvested, because we think that it's the way to continue progressing in our infrastructure.”
Metrics
Consolidated revenue rose 3.1% to €9.7 billion in Q4, though Telefonica ended up with a net loss of €1.2 billion. Full year 2021 revenue rose 2% to €39.3 billion, with net income totaling €8.1 billion. Fiber-to-the-home passings totaled 55.8 million as of the end of the year.