Vodafone and Altice have combined to create a €7 billion ($6.8bn) joint venture called FiberCo in Germany that will provide Fiber-to-the-Home (FTTH) for up to seven million homes.
The rollout will be over a six-year period and will see Vodafone upgrade its existing network in the country.
The JV will be split 50-50, with the vast majority (close to 80 percent) of the rollout focused around large housing associations within the operator's existing hybrid fiber cable network, with 20 percent of the rollout to be carried out beyond Vodafone's existing footprint.
FiberCo will invest up to €7 bn ($6.8bn) on the project, of which 70 percent will be financed by debt, while Vodafone says it expects to earn cash proceeds from Altice of up to €1.2bn ($1.1bn) as part of the transaction.
These cash proceeds include an upfront payment of €120 million ($117m) at closing, and additional deferred payments of up to €487m ($477m) (in aggregate) to be paid as the roll-out progresses. Vodafone could also get a payout of up to €595m ($583m) based on FiberCo's performance.
The transaction is still subject to regulatory approval, but Vodafone expects a deal to close in the first half of 2023.
“This partnership builds on Vodafone’s significant next-generation network with Altice’s industrial expertise and proven Fiber-to-the-Home construction capabilities enabling us to bring gigabit connectivity to even more customers in Germany," said Vodafone Group chief executive Nick Read.
"This significant infrastructure investment supports the country’s social, economic, and digital development and the broadband ambitions of the German government as part of Europe’s Digital Decade targets.”
Read has been under pressure in recent months from Vodafone's investors, with the operator's share prices dropping. The UK operator is in talks with Three UK over a proposed merger which could be worth between £12 billion to £15bn ($13.4bn to $16.8bn).
Elsewhere Vodafone recently chose investment bank Evercore to sell a stake in its fixed wireless business in Spain. Some sources believe the sale of Vodafone's fixed business could be worth €4 billion ($3.95bn).
Meanwhile, French tycoon Xavier Niel recently secured a 2.5 percent stake in Vodafone. Niel is keen on pursuing consolidation opportunities.
