Allianz, Telefónica partner to build €5bn fiber optic network in Germany

German insurance giant Allianz Group and Spanish telecommunications company Telefónica Group agreed to create a 50:50 joint venture (JV) for deploying fiber-to-the-home (FTTH) in Germany with an investment of up to €5 billion.

The new FTTH company plans to install more than two million Homes Passed in rural and semi-rural areas region by creating a fiber network of more than 50,000 kilometers over a six-year deployment period.

As per the agreement, Allianz Capital Partners, an asset manager of the German insurer, and Telefónica Group each will invest 50% in the joint venture.

Allianz Capital Partners will invest on behalf of Allianz insurance companies and the Allianz European Infrastructure Fund. The Spanish telecommunications company will invest through its subsidiaries Telefónica Infra and Telefónica Deutschland/O2.

The new JV company will offer FTTH wholesale access to all telecommunications service providers in Germany to enable them to offer the services to their end customers.

Allianz brings to the joint venture its experience from several fiber investments alongside a strong domestic footprint. Previously, the German insurance group is said to have committed to major fibre roll-outs across France and Austria.

Günther Thallinger – Member of the Board of Management of Allianz SE: Investment Management and ESG said: “Allianz, as a committed investor in essential infrastructure, is excited to enter into a joint venture with an experienced partner in the Fiber-to-the-Home segment like Telefónica.

“Ongoing digitalization of our society and increasing data volumes more and more require high bandwidth for households as is currently evidenced by the COVID crisis with millions of people having shifted to working and learning from home. We are proud to invest in a sustainable infrastructure which we believe will also ensure attractive returns for our policyholders.”

Allianz, Telefónica to create €5bn fiber optic network JV in Germany. Photo courtesy of Allianz.

Telefónica, on the other hand, will support the new joint venture with its technical capabilities and expertise in installing and operating fiber networks. Its subsidiary – Telefónica Spain will offer network design and operations expertise right through the deployment years of the joint venture.

Additionally, the joint venture will benefit from the distribution power of Telefónica Deutschland / O2, which will also serve as its first wholesale client besides providing certain transport infrastructure.

Ángel Vilá – Chief Operating Officer at Telefónica Group said: “We are very enthusiastic about the opportunity to partner with Allianz, one of the world’s largest investors with whom we share the ambition to drive fiber roll-out in Germany, contributing to accelerate the country’s digital development.

“We are delighted to put our expertise behind this partnership, joining forces with Allianz as a key element for success, strengthening Telefónica Infra’s value proposition and reinforcing the strategy presented by Telefónica a year ago.”

The creation of the joint venture is expected to be finalized in the first half of 2021 once it gets the approval of the competent merger control authorities.