Telefónica creates a subsidiary with CDPQ in Brazil to market fiber optics



Telefónica has reported that its subsidiaries Telefônica Brasil and Telefónica Infra have reached an agreement with Caisse de dépôt et placement du Québec (“CDPQ”) for the construction, deployment and marketing a fiber to the home network (FTTH) in Brazil, in medium-sized cities outside the State of São Paulo, through a joint venture called ‘FiBrasil Infraestrutura e Fibra Ótica SA’.

FiBrasil will operate as a wholesale, independent and non-discriminatory access operator.

Regarding the capital structure of FiBrasil, after the closing of the operation, the Telefónica Group and CDPQ will each have 50% of FiBrasil under a co-control governance model. The 50% stake in the Telefónica Group will be held through Telefônica Brasil, SA and Telefónica Infra, SLU with a 25% stake each.

Telefónica Brasil, SA will contribute approximately 1.6 million real estate units passed by FTTH fiber and will be FiBrasil’s anchor tenant.

The economic terms of the operation include a total investment by CDPQ that reaches 1.8 billion reais (approximately 267 million euros at the current exchange rate), including payments to Telefónica Brasil, SA and FiBrasil, for 50% of FiBrasil’s capital, as well as certain payments that Telefónica Infra, SLU will make, in equivalent economic terms, for 25% of FiBrasil. This implies a valuation of the brownfield assets contributed by Telefônica Brasil, SA of 16.5 times OIBDA 2020 Pro-Forma.

CDPQ’s capital contributions, along with external funding to be obtained by the joint venture, will provide the funds necessary to undertake FiBrasil’s business plan and achieve its deployment objectives (that is, reach 5.5 million units real estate passed by FTTH fiber in 4 years).

The closing of the operation is subject, among other conditions, to obtaining the corresponding authorizations from the regulatory authorities.

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