Telefonica is creating a new fibre division to help it reach five million rural areas in the next few years and said it was buying a significant minority stake in the business from potential investors.
Telefonica's chief operating officer said the new unit was a joint venture between Telefonica Spain and Telefonica Infrastructure. The new FiberCo will initially include Telefonica's brownfield network contribution and from there seek to expand to five million new locations through greenfield construction. Deployments will be focused on low density areas of the country, with Telefonica as the main customer for the new company's network.
"We are doing this because we think it will create the most attractive project for Telefónica and potential investors," he said, noting that the lower risk of competition from overbuilders in the unserved areas it is targeting will help FiberCo achieve higher service utilisation. In addition, FiberCo's rural focus will make its projects "eligible for fibre subsidies from European funds and other agencies."
Telefonica is already deeply involved in fibre deployment in Europe through joint ventures in the UK and Germany, and has stakes in a number of fibre companies in Chile, Colombia and Brazil.
UK fibre
Virgin Media O2, a 50-50 joint venture in the UK set up by Telefonica with Liberty Global in June, reported earnings last week. The company added 60,000 broadband subscribers in the fourth quarter and 177,000 for the full year 2021.
The operator previously announced a plan to upgrade its entire network to fibre, including its 14.3 million cable premises. In its earnings report, Virgin Media O2's chief executive revealed that Telefonica and Liberty Global are working to establish a new fibre joint venture in the country, which will extend VO2's footprint to around 23 million locations.
The new UK venture aims to deliver fibre to 7 million new homes outside its current footprint in the country by the end of 2027. He added that all its joint ventures "are designed to deliver growth and invest in areas where we have not yet invested, as we see this as a way for our infrastructure to continue to progress."
