KKR to acquire $1bn stake in Telefónica Chile’s network
KKR to acquire $1bn stake in Telefónica Chile’s fibre network
23 February 2021 | Natalie Bannerman
KKR has entered into an agreement with Telefónica to establish Chile’s first open access wholesale fibre optics company valued at $1 billion.
Under the terms of the agreement, KKR will acquire a majority stake in Telefónica Chile’s existing fibre optic network and then turning it into an open access network through a newly created, locally managed Chilean company.
“We are excited to be working with Telefónica to create the first-ever open access wholesale fibre network in Chile,” said Waldemar Szlezak, senior leader on KKR’s infrastructure investment team.
“This will create competition where none exists today, helping Chilean families, companies, and the economy recover and grow in the digital economy.”
Telefónica will retain a 40% stake in the business, with KKR holding the 60%. Once completed, the newly created business will serve as Chile’s first open wholesale digital infrastructure, creating a competitive marketplace for all operators in the country.
Once approved, the new business plans to expand broadband coverage from its current 2 million households to a minimum of 3.5 million households by 2023, as well as to provide wholesale service to more than 40,000 businesses, telecom towers, and small cells.
In addition, the newly formed network will deliver connectivity to under-served areas with more than two-thirds of households covered by the network located outside of high-income urban areas.
“This transaction demonstrates the value of our infrastructure and our willingness to contribute to the sustainable development of the fibre 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 fibre-optic deployment,” added Alfonso Gómez Palacio (pictured), CEO Telefónica HispAm.
“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.”
KKR is making the investment through its Global Infrastructure Investors III Fund. Since its inception in 2008 it has grown to become one of the most active infrastructure investors globally, deploying more than $24 billion across approximately 40 infrastructure investments.
The deal is due to close in the first half of 2021, subject to regulatory approvals.