In its first acquisition, FiBrasil, the Brazilian neutral fiber network company created by Telefónica and Canada’s CDPQ, has bought Fiberty 1 (formerly Phoenix Fiber do Brasil) for an undisclosed sum from investment fund Blackstone.
Fiberty 1's network reaches 170,000 homes through 1,500km of fiber, adding 11 municipalities to FiBrasil's current reach in the states of Minas Gerais, Goias, Espirito Santo and Rio Grande do Sul, according to a Telefônica statement.
The transaction includes another 18 cities where networks are under development, with around 310,000 households to be covered between 4Q21 and 1Q22.
With the acquisition, FiBrasil increases its coverage target to 6mn homes in four years, from 5.5mn homes initially planned.
Telefônica Brasil CEO Christian Gebara said in the Q2 earnings call that FiBrasil will not only grow organically as a neutral, wholesale fiber operation but also through M&As.
Telefónica closed the transaction with CDPQ in July, after recently receiving the regulatory approvals.
FiBrasil started operations with around 1.6mn fiber-to-the-home (FTTH) clients inherited from Telefônica Brasil and a plan to reach 6mn homes, focusing on mid-sized cities outside São Paulo state.
Telefônica Brasil, as FiBrasil's anchor client, plans to accelerate the execution of its growth strategy in fiber, expanding its coverage from the current 17mn homes passed with fiber (connected, though not necessarily clients), to 24mn homes by the end of 2024.
The telco expects fiber to be a key driver of services cross-selling, return on investments, and to reinforce the company’s position as leading convergent operator in the country, Telefônica said in a filing.
The CDPQ transaction had a positive impact of 225mn reais (US$43.4mn) on Telefônica’s before-tax cash flow. It is expected to add 1.5bn reais in the next years, partially conditioned on the achievement of the targets previously agreed between the parties.
CDPQ will make contribute around 750mn reais to FiBrasil.
The contributions, as well as the potential debt to be raised by FiBrasil, will finance the JV's business plan.
Source: https://www.bnamericas.com/en/news/telefonicas-brazil-fiber-jv-acquires-blackstones-fiberty-1