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The joint venture’s fibre-to-the-home (FTTH) network will span 12.2 million premises, making it one of the largest networks in Europe
This week, Singapore sovereign wealth fund GIC has agreed to purchase a 25% stake in MásOrange and Vodafone Spain’s upcoming fibre network joint venture, internally known as ‘Surf’.
Vodafone Spain and MásOrange announced the creation of the joint venture in January. The business, estimated to be worth €8–10 billion, will combine the two companies’ fibre-to-the-home (FTTH) networks, reaching roughly 12.2 million premises across Spain.
The move will create the largest fibre network operator in the country, with more than 4.5 million existing customers.
Assuming the typical regulatory approvals, the deal is expected to close in Q4 this year.
“We look forward to partnering with MasOrange and Vodafone Spain to create Spain’s largest FibreCo,” said Boon Chin Hau, Chief Investment Officer at GIC. “Spain is one of the most advanced European countries in terms of its Fibre to the Home rollout, however, there remains significant fixed broadband penetration growth potential. In addition, the FibreCo has been designed to offer best in class service quality to customers whilst offering robust core infrastructure characteristics to investors.”
The financial details of the deal remain undisclosed, but sources speaking to Bloomberg have previously valued Surf at €6–7 billion, including debt, suggesting the stake is worth €1.5–€1.75 billion.
MásOrange says it will receive at least €3.2 billion from the deal, which it will use to pay down debt, while Vodafone Spain’s new owner, Zegona, will receive €1.4 billion.
That GIC is only taking a 25% stake in the new business is notable. When the creation of Surf was first announced, the plan was for MásOrange to hold a 50% stake and Zegona a 10% stake, with a third-party investor to be found for the final 40%. By May, however, the sale of a stake of this size was looking unlikely, with the company reportedly having only received non-binding offers below the minimum valuation the partners were seeking.
This smaller investment from GIC, therefore, will see the new ownership structure adjusted accordingly, with MásOrange and Zegona’s stakes increased to 58% and 17%, respectively.
Spain is one of the most advanced fibre broadband markets in Europe, with FTTH technology reportedly available to 95.2% of households.
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