MásOrange and Vodafone Spain agree terms on a fibre JV

• MásOrange and Vodafone Spain confirm plans for a fibre joint venture
• The shareholding structure of the potential company will also include a third-party investor
• The new entity would provide coverage to 11.5 million premises in Spain
• Orange Group CEO Christel Heydemann maintains the move is part of its strategy to maximise the use of its infrastructure

MásOrange and Vodafone Spain have outlined their intentions to create a joint fibre optic network company in Spain that will provide coverage to 11.5 million premises across the country.

In what essentially represents confirmation of earlier media reports, the telco players separately announced that they have signed a confidential, non-binding letter of intent that outlines the terms for a network sharing agreement on a national level.

The proposed plan involves the creation of a new fibre network joint venture (JV) in Spain, while the pair also aims to introduce a third-party investor.

In terms of the shareholding structure, Orange (which in March became the joint co-owner of MásOrange with MásMóvil) has confirmed that the plan is for MásOrange to own a 50% stake, with the remainder half split between Vodafone Spain and the third-party investor. Zegona Communications, which became the new owner of Vodafone Spain in May, explained in a separate statement that the expected capital structure of the JV includes a 10% ownership by Vodafone Spain, while the remaining 40% would be owned by the financial investor.

“The new company will benefit MásOrange and Vodafone Spain customers, as well as the Spanish market at large by ensuring access to the most advanced fibre optic network, offering the best quality and enabling the rapid adoption of new technologies, while stimulating investment and innovation. This network will become a benchmark for sustainable development, meeting high ESG standards thanks to energy savings,” Vodafone Spain noted in a translated statement, available here.

“Creating this new FibreCo in partnership with MásOrange is a key part of our plan to transform Vodafone Spain. It will deliver a highly efficient fibre infrastructure for our customers with leading fixed line technology, which will be at the forefront of the industry,” said Eamonn O’Hare, CEO and chairman of Zegona.

Orange Group CEO Christel Heydemann noted that the potential establishment of a fibre company with Vodafone Spain “would allow us to capitalise on our infrastructure.”

Delving further into the details during an earnings call to announce Orange’s second-quarter financials, Heydemann noted that the two operators intend to “maximise and monetise the use of the MásOrange and Vodafone’s fibre network in dense areas by creating the FTTH [fibre-to-the-home] network with the best occupancy rate in Spain.” She added that upon inception, the new company (which she referred to as a FibreCo) will boast a total of 11.5 million fibre lines and around 4 million connected households.

“We plan to crystallise the value of this FibreCo by letting a financial investor enter the capital of the JV, leading to a targeted capital structure where MásOrange will have 50% of the shares”, she added.

Orange’s chief stressed that the move is part of its wider strategy, in which maximising the use of its infrastructure plays a key role. She further explained that the main objective for Orange is to combine with Vodafone Spain’s infrastructure, and to have “the best penetration ratio” on its fibre infrastructure in Spain.

Apart from combining the assets, one of Orange’s priorities is to move cable customers from Vodafone Spain onto the future FibreCo infrastructure.

The creation of the fibre company is still subject to a final agreement between the two telcos, as well as approval by the relevant regulators.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV