KKR, Telefónica ink $500m Colombian open fibre network deal

KKR, Telefónica ink $500m Colombian open fibre network deal

19 July 2021 | Natalie Bannerman

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KKR has entered an agreement with Telefónica Colombia to establish the country's first independent open access wholesale digital infrastructure company.

Valued at roughly $500 million, KKR will acquire a 60% stake in Telefónica’s existing fibre optic network, with Telefónica retaining the remaining 40%. After which KKR convert the network into open access through a newly established independent entity.

“We are thrilled to, once again, be working with Telefónica to provide greater broadband access to those who need it, and to be doing so in Colombia, a country we believe is primed for significant growth ahead and which serves as an attractive destination for investors,” said Waldemar Szlezak, senior leader of KKR’s infrastructure investment team.

“This new venture in Colombia, along with ON*NET Fibra de Chile, demonstrates the potential to invest in innovative financing and growth strategies to promote digital infrastructure in Latin America.”

Once operational the new company will be run independently by a local team in Colombia leveraging the combined experience of both KKR and Telefónica. When the transaction is completed, Telefónica’s existing fibre optic network will become open access and available for all internet service providers in Colombia to use, including Telefónica.

In addition, with the investment from KKR, the new company plans to expand existing fibre optic coverage which currently stands at 1.2 million homes to a minimum of 4.3 million homes by the end of 2024. This included the coverage of at least 87 municipal areas in Colombia, with more than half comprised of underserved areas outside of high-income urban areas.

“More Colombian families and small businesses should have the ability to access ultra-high-speed digital service," said María Fernanda Suárez Londoño (pictured), a senior advisor to KKR.

"KKR’s investment will help bridge that gap by promoting competition and committing to expand the network in municipalities across Colombia. It also indicates the potential for KKR’s continued growth in digital infrastructure in Colombia and in the region.”

From a technical standpoint, the network will use state-of-the art technology to deliver speeds up to 1000 times faster than traditional networks, delivering greater broadband access across to consumer and businesses across Colombia.

“The agreement with KKR will accelerate the deployment of fibre optic in Colombia at an unprecedented rate, in a market that has shown enormous potential in the last year," added Alfonso Gómez Palacio, CEO of Telefónica Spanish-speaking Latin America.

"In addition, fibre will create opportunities for thousands of homes and businesses that see digitalization as an opportunity for development. This is one more step by our company to lead FTTH services in Latin America.”

KKR is making the investment through its global infrastructure fund and the deal is subject to customary regulatory approvals.