Home » Telefônica signs an agreement with the Canadian CDPQ for a fiber network in Brazil – Época Negócios

Telefônica signs an agreement with the Canadian CDPQ for a fiber network in Brazil – Época Negócios

by Rex Daniel

Telefonica Headquarters, São Paulo (Photo: Disclosure)

On Tuesday, Telefônica Brasil announced an agreement with Canadian pension fund manager CDPQ, which will invest up to R $ 1.8 billion in a joint venture of a company to form a wholesale fiber optic network in Brazil.

The agreement also includes the Spanish Telefónica Infra, the controlling group of the company which operates under the Vivo brand in Brazil. The joint venture will be formed by CDPQ with a 50% stake and the remainder divided equally between Telefônica Brasil and Telefónica Infra, the operator informed.

“This translates into an implicit valuation of the ‘brownfield’ assets contributed by Vivo of 16.5 times the profit before interest, taxes, depreciation and amortization (Ebitda) of 2020 pro forma”, informed Telefônica Brasil.

The transaction aims to accelerate the expansion of the fiber optic network (FTTH) to new locations. The joint venture, called FiBrasil, aims to reach around 5.5 million households in four years, focusing on mid-sized cities outside the state of São Paulo, the original base of Telefônica Brasil.

For months, the Spanish group has been evaluating ways to accelerate the expansion of fiber infrastructure in the country, amid an explosion in demand for bandwidth fueled by social isolation measures. In October, an executive at the company said it could expand the network through mergers and acquisitions.

“Brazil is the size of a continent. Our investments (capex) will not reach everything,” Telefónica chief operating officer Angel Vila told Reuters last week, referring to the segment’s strategy.

The operator will contribute around 1.6 million households transmitted over FTTH operated by it and will also be a reference customer of the new company, Telefônica Brasil said.

The companies expect the deal to be reached in the second quarter of this year.

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