LONDON (Reuters) – Vodafone and Altice launched a joint venture on Monday to challenge Deutsche Telekom (OTC) by building a €7 billion ($6.8 billion) fiber broadband network in Germany.
Vodafone (Nasdaq:) said the FibreCo project will build a “fibre-to-the-home” broadband network available to 7 million German homes, allowing Britain’s Vodafone to upgrade its existing network in Germany, its largest market.
FibreCo will invest up to €7 billion in the six-year project, which is expected to be 70% financed through debt.
Altice subsidiary Geodesia will be contracted with Vodafone Germany responsible for marketing the faster broadband to new customers.
Both companies will own 50% of FibreCo.
The engagement process is subject to regulatory approval and is expected to be completed in the first half of 2023.
“This partnership builds on Vodafone’s important next-generation network with Altice’s industrial expertise and proven fiber-to-home building capabilities,” said Nick Read, CEO of Vodafone.
Vodafone said it would receive cash returns from Altice of up to €1.2 billion, which could exceed its equity contributions to the joint venture over time.
Under pressure from investors who have long struggled to improve returns in pan-European mobile and broadband company Vodafone, Reed is in talks with CK Hutchison about merging their businesses in Britain.
Altice is an Amsterdam-based holding company that brings together the assets of French-Israeli cable magnate Patrick Drahi. It already operates fiber infrastructure joint ventures in France, Portugal and Israel.
Vodafone shares were trading 0.5 percent higher at 100 pence in early trades on Monday.
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