Telefónica Plans to Establish Another Spanish Fiber Optic Joint Venture with Vodafone

On the eve of announcing its Q2 2024 results, Telefónica revealed that it plans to sign a non binding memorandum of understanding with its competitor Vodafone Spain to establish another fiber optic joint venture in Spain.

Telefónica’s own fiber optic network currently has over 30.2 million households in the domestic market. The company has partnered with Vauban Infrastructure Partners and Cr é dit Agricole Assurance to establish a rural fiber to the home (FTTH) joint venture under the Bluevía brand. Bluevía currently operates as a neutral provider through 5 million locations.

The group currently plans to establish an FTTH joint venture with Vodafone Spain, a subsidiary of Zegonia, and has stated that it is entering exclusive negotiations to reach agreement on the final terms. According to the two operators, the new FibreCo will provide services to approximately 1.4 million connected users through around 3.5 million locations. Its purpose is also to introduce third-party financial investors.

It is worth noting that Vodafone Spain has just reached a similar agreement with MasOrange. MasOrange is a joint venture formed earlier this year by the merger of Orange Spain and Másmóvil. Here, these two partners plan to establish a shared fiber optic network company that will cover approximately 11.5 million locations. They also plan to introduce another investor.

During Wednesday’s earnings conference call, Ángel Vilá, Chief Operating Officer of Telefónica, pointed out that it is too early to provide any signs of the potential impact of the proposed joint venture with Vodafone, as it is currently only a memorandum of understanding. More information should be released in the coming months.

He did state that the joint venture with Vodafone “will increase or enhance our wholesale revenue with this partner,” and he also pointed out that a wholesale and nationwide roaming agreement has recently been reached with Digi Spain.

He said, “There are many changes, but the two agreements we signed support Telefónica in Spain to achieve wholesale revenue at reasonable prices, which does not necessarily or will not erode the condition of the retail market.”

It can be confirmed that Telefónica also has extensive experience in fiber optic joint ventures and is collaborating with a range of investors including Allianz, CDPQ, KKR, and Infravia. It not only established the Bluevía joint venture in Spain, but also supervised the FiBrasil joint venture in Brazil, Nexfiber in the UK, Unsere Gr ü ne Glasfaser (UGG) in Germany, ONNET Fibra in Chile, and ONNET Fibra in Colombia through its Telef ó nica Infra division.

Another joint venture is underway in Pangea, Peru, while Telefónica, Liberty Global, and Virgin Media UK are planning to establish a new NetCo in the UK.

Overall, Jos é María Álvarez Palete, Chairman and CEO of Telefónica, gave a positive evaluation of the group’s performance in the second quarter of fiscal year 24, which is the second quarter under the group’s recently announced “Global Positioning System” (Growth, Profitability, and Sustainability) plan.

It is worth noting that revenue in all of our major markets is growing, “he said.” Importantly, we have seen strong growth in EBITDA minus capital expenditures, with a year-on-year increase of 11.5%. The impressive double-digit growth this quarter has already exceeded our full year guidance and laid a solid foundation for our development in the second half of the year.”

In the second quarter of fiscal year 24, Telefónica Group’s total revenue increased by 1.2% year-on-year to 10.25 billion euros (11.1 billion US dollars), while EBITDA increased by 1.8% to 3.2 billion euros (3.46 billion US dollars). Net profit decreased by 3.3% to 447 million euros (484 million US dollars).