A total of 11 billion euros in new investments and overall credit lines extended to 7.175 billions for the FTTH (Fiber To The Home) Italian network operator Open Fiber. This is foreseen by the new strategic plan 2022-2031 of the tlc group controlled 60% by Cdp Equity and 40% owned by Macquarie Infrastructures approved last December 3rd by the Board of Directors and announced last Friday 10th (see here the press release).
We recall, in fact, that on December 3rd the closing of the sale of a 50% stake in Open Fiber’s capital was signed by Enel with Cdp and Macquarie Infrastructures (see here a previous article by BeBeez). More in detail, on the one hand, Cdp Equity bought an additional 10% stake in Open Fiber, thus becoming its largest shareholder with a total stake of 60%; and on the other hand, Macquarie Asset Management has completed the acquisition from Enel of the remaining 40%. The announcement of the deal dates last August (see here a previous article by BeBeez). The new members of the Open Fiber Board of Directors were then appointed: Barbara Marinali (chairman), the current general manager Mario Rossetti (ceo), Alessandro Tonetti and Roberta Battaglia designated by CDP Equity and Nathan Luckey and Geoffrey David Shakespeare expression by Macquarie.
Returning to the contents of the new industrial plan, in detail this provides for approximately 11 billion euros of investments for the coverage with the latest generation network of approximately 24 million real estate units (IU) from the current over 13 millions IU and to support the growth of the base customers, in line with the plan target which provides for the achievement of the take-up target at 50%. These investments will be covered by the extension of the financing to 7.175 billion euros, by equity and cash generation.
Open Fiber has in fact reached a financing agreement with Banco BPM, BNP Paribas, Crédit Agricole, ING, Intesa Sanpaolo, Santander, Société Générale and Unicredit, aiming to support the further investments of the Industrial Plan as well as refinance the previous Project Financing of 4.1 billion euros, improving the conditions applied and extending its duration to 2028. The loan package, which will be finalized before the end of the year, is the largest ever made in EMEA for investments in telecommunications networks. A syndication process is envisaged that will allow other Italian and European banks to enter the loan.
But that is not all. Open Fiber will be able to resort to an additional 2.8 billion euro credit line in the event that further investments are required following the outcome of the calls for tenders that will be launched by the Ministry for Technological and Digital Transition (MITD) in the scope of the 1 Giga Italy Plan. Following the outcome of the tenders, expected for June 2022, the company will in fact define in detail the coverage plan for the further portion of grey areas in which it will operate under competition and, therefore, the corresponding incremental number of real estate units. The grey areas are the areas where there is a single network operator and where no other operator is planning to develop a Next Generation Access (NGA) network.
The main feature of the new plan compared to the previous one is in fact its flexibility. The breadth of financial resources available on the basis of the agreement with the banks makes it possible to accelerate and achieve all the objectives of the old plan, therefore to participate in all the tenders envisaged under the PNRR for gray areas, and to be able to plan the further coverages to be carried out in the gray areas of the market.
At the end of the plan, a margin of over 75% is expected, with revenues of over 2 billion euros. Break even (ebitda net of investments) is expected in 2026.
The marketing of connectivity services on the network created by Open Fiber is now active in 190 large and medium-sized cities and in over 3,000 small municipalities in Italy. More than 200 national and international operators have entered into commercial agreements with Open Fiber for the use of its network. The loan package will make it possible to complete the coverage of cities, small municipalities and industrial areas, offering a decisive contribution to the objectives of the “1 Giga Italy Plan” for reducing the digital divide in our country. Since the birth of Open Fiber, resources of over 15 billion euros will be put in place for the project.
Mario Rossetti, ceo of Open Fiber, commented: “In a few years Open Fiber has gone from the startup phase to a leading role in Italy and Europe in the development of networks entirely in optical fiber. With the strong support of shareholders and solid partnerships with the main operators, we are ready to complete the coverage of cities, small municipalities and industrial areas, offering a decisive contribution to the objectives of the Italy 1 Giga Plan for reducing the digital divide in our country”.
