E.ON has sold a 50 percent stake in its German fiber-optic business to Igneo in a deal that demonstrates the enduring appeal of infrastructure assets to the investor community.
The energy company announced that it has reached a deal with asset manager Igneo for half of Westenergie Breitband, with neither party sharing financial information.
In fact, the companies involved haven't revealed much about the deal, but it's clear that we're looking at another case of an operator looking to profit from its infrastructure and bring in some capital for future expansion.
"Strong partnerships are especially important for the digitization of our country. That's why we are pleased to join forces with renowned long-term investor Igneo to accelerate the rollout of broadband in Germany," said Thomas König, a member of the E.ON management board responsible for the network.
Details on the extent of the acceleration are also mixed. The new joint venture - in the words of E.ON and Igneo; the two companies say Westenergie Breitband will remain essentially the same company, but with 50 percent of the new shareholders - plans to provide more than 1.5 million households and wholesale customers in Germany with high-speed broadband connections. They did not disclose any previous goals by way of comparison.
According to Westenergie Breitband's website, the company has already laid 10,000 kilometers of fiber in North Rhine-Westphalia, Rhineland-Palatinate and Lower Saxony, providing more than 100 people in 300 cities with access to its network. The operator's raison d'être is to provide fiber-optic connections to rural communities, offer its services to municipalities through wholesale deals, and go directly to end users under the E.ON Highspeed brand.
As further background, energy provider E.ON announced its entry into the broadband market at the beginning of 2019, launching a €130 million rollout project in Brandenburg and building up its business in this area in the following years.
Meanwhile, at the end of last year, the company announced the creation of a new division, E.ON TowerCo, with a mandate to convert power towers so that they can be used as radio masts for 4G and 5G networks. The business is still in its early stages, but at the time the company noted that it had 100,000 towers in Germany that could be used to install radio antennas. Since the company has the huge advantage of already owning these towers and is therefore able to sidestep the myriad planning issues that often arise in base station construction, there is clearly a lot of business potential here.
In May, E.ON TowerCo partnered with NOVEC, a Dutch radio mast operator, to build hundreds of new sites in Germany, again leveraging E.ON's existing footprint - essentially the roof and the property it already owns.
While E.ON's message in the tower business is around eliminating coverage black spots and reaching remote areas, it's fair to point out that it's also dipping its toe into the lucrative passive mobile infrastructure market. While this is a bit of a departure from the main fiber broadband story, the end result is likely to be similar: the arrival of financially strong investors.
But back to fiber.
"We are pleased to enter into a long-term partnership with E.ON, one of the largest energy network and infrastructure operators in Europe," said Gregor Kurth, partner at Igneo Infrastructure Partners.
"Westenergie Breitband is already the leading high-speed broadband provider in the region, and the scale, capacity and ambition that Igneo and E.ON bring to this partnership will enable the company to accelerate its deployment and deliver full-fiber broadband access to more homes," he added.
Initiatives like this one will also help the German government achieve its goal of full fiber coverage by 2030, which it announced last week. Germany used to be a fiber-optic backwater, but the wheels are well on their way to changing that image.
