Investment firm KKR has entered into a $1bn agreement with Telefónica to create an open access wholesale company in Chile. Under the agreement, KKR will acquire a majority (60%) stake in Telefónica Chile’s existing fiber optic network and make that network open access through the newly established independent company.
Upon approval, the new business plans to expand broadband coverage in Chile from 2 million households today to a minimum of 3.5 million households by 2023, providing wholesale service to more than 40,000 businesses, telecom towers, and small cells. The network will also provide access to under-served areas with more than two-thirds of households covered being outside of high-income urban areas.
The new company will be controlled by KKR and will leverage the firm’s global experience in digital infrastructure and in operating and deploying fiber networks, including related investments in fiberCop in Italy, Hyperoptic in the UK, Deutsche Glasfaser in Germany, Telxius in Europe and Latin America, Hivory in France, Global Technical Realty in Europe, Bharti Infratel in India, and Pinnacle Towers in the Philippines. KKR is making the investment through its Global Infrastructure Investors III Fund.
Waldemar Szlezak, senior leader on KKR’s infrastructure investment team said: ‘We are excited to be working with Telefónica to create the first-ever open access wholesale fiber network in Chile. This will create competition where none exists today, helping Chilean families, companies, and the economy recover and grow in the digital economy.’
Alfonso Gómez Palacio, CEO Telefónica HispAm, added: ‘This transaction demonstrates the value of our infrastructure and our willingness to contribute to the sustainable development of the fiber market in Chile. We have seen increased commercial activity over the last 12 months, and this transaction will further support this momentum as we will be able to accelerate the fiber-optic deployment. Our stake in the new company provides us with substantial flexibility in the long-term, in a market with enormous future potential. We are proud to share this project with our partners at KKR, a company with whom we have worked on key initiatives for Telefónica.’
The transaction is expected to close in the first half of this year, subject to regulatory approvals.
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