Masorange and Vodafone sell 25% of their fiber company to Singapore's sovereign wealth fund.

Masorange and Vodafone Spain have agreed to sell 25% of their fiber optic joint venture to GIC, the Singapore sovereign wealth fund . At the start of the transaction in January, they had hoped to place 40% of the new company's capital with an investment partner, but they have since lowered those expectations.

The valuation that both telecoms gave to their fiber company in January was around €9-10 billion, which resulted in a sale of up to €4 billion if they managed to offload 40% of the company. The percentage was ultimately settled at 25%, and although the transaction value has not been disclosed, media reports have been circulating for months that the offers received were far lower than the initial valuation.

The lowered expectations for the stake being sold also changes the shareholding balance of Fibreco, as these companies are known in the jargon. Masorange will retain 58% of the shares, Vodafone Spain 17%, and GIC 25% ; initially, the shareholding balance was expected to be 50%, 10%, and 40%, respectively. The newspaper 'Expansión' reported in May that they were considering selling less than that 40% and that they could resume the sale of another stake in the future.

Masorange has reported that it has received €3.2 billion from the creation of this company. Market sources indicate that in Vodafone's case, this amount was €1.4 billion. However, this significant amount is not related to the sale price of the 25% stake to GIC, but rather the money that the joint venture itself has paid to each of the two partners for providing the 12 million real estate units it will own, for which the fiberco issued debt. With the entry of the Singapore fund, a portion is expected to also go to the coffers of the two telecoms, although the amount of this 25% placement has not yet been disclosed.

With all this money, both Masorange and Vodafone announced in January that they would use it to reduce debt. And, in the case of the latter, to remunerate its shareholder, which in this case is the British fund Zegona, which acquired Vodafone Spain just a few years ago.

"Masorange and Vodafone Spain will jointly contribute approximately 12 million real estate units and nearly 5 million customers to the new fiber network joint venture. The network will be dedicated exclusively to both operators, who will also continue to maintain and operate the infrastructure each has contributed," they reported in a statement, thus creating one of the largest fiber partnerships on the continent.

“We are very pleased to announce this agreement with Vodafone Spain and GIC to create the largest fiber optic company in Spain. GIC was selected following a competitive process with nearly 20 interested investors. This alliance will allow us to offer our customers the best premium FTTH connectivity and guarantee future technological upgrades,” said Meinrad Spenger, CEO of Masorange . José Miguel García, CEO of Vodafone Spain, commented: “We continue to advance our strategy to transform Vodafone Spain into a more competitive, efficient, and growing company. This agreement is a significant milestone in our plan, as it will guarantee our customers access to fiber optic networks and improved service.”

On the buy-side, Boon Chin Hau, GIC's director of infrastructure investments, expressed his satisfaction with partnering with the two telecommunications companies in Spain: "The country is one of the most advanced in Europe in fiber-to-the-home deployment, although there is still significant growth potential in fixed broadband penetration. Furthermore, the fiberco has been designed to offer top-quality service to customers, while offering robust features for investors in critical infrastructure."

As stated in the press release, the fiber network will provide substantial benefits to the customers of both operators. "This infrastructure will contribute to the development of connectivity and digitalization in Spain, providing operators with a benchmark FTTH network, driving operational efficiencies, and creating the foundation for continuous network and service improvement. Thanks to its larger scale, two solid long-term customers, operational efficiencies, and investment capacity, the new fiberco will facilitate the rapid adoption of cutting-edge technologies, incorporating the latest market advances such as Xgspon, while fostering innovation to offer the highest quality service in Spain," they indicated in a press release.

As part of the transaction, Masorange will acquire Conexus Networks, the wholesale FTTH access provider in northern Spain, and contribute it to the company.