KPN has agreed a joint venture with the Dutch pension funds manager APG to expand the operator's fibre network roll-out. APG will acquire 50 percent in a joint venture with KPN to cover around 685,000 households and 225,000 businesses in under-served areas such as villages and business parks.
KPN already plans to cover 2.5 million premises with FTTP, and its roll-out is well underway in cities across the country. The company's target is to take FTTP coverage to 50 percent of the country in 2023 and 65 percent in 2025, compared to around a third at the end of last year. The new joint venture to "take up the long tail" of KPN's plans means the fibre network should cover around 80 percent of Dutch households by 2026. In addition, there will be much better coverage of businesses.
APG will pay EUR 440 million cash for the 50 percent stake, with half upfront and the remainder in annual installments as the roll-out progresses. The total equity of EUR 880 million for the JV implies a value of around EUR 970 per line. Over the rollout period, capex is estimated at EUR 1.2 billion, of which around 70 percent will come from debt. Subject to regulatory approval, the JV is expected to start operations in Q2.
The initial payment more than covers KPN's share of expected equity contributions in the JV, and the operator said almost all construction capacity and capex financing for the extended roll-out have been secured. KPN will not consolidate the company, but has a conditional call option on one share that could give it control in future to consolidate the business.
Open wholesale network
The network will be independent and open to other service providers. It will be operated on a wholesale basis, with KPN as the anchor tenant. The partners also see the potential to extend the venture's footprint further beyond 2026.
APG Group is one of the world's largest independent pension fund managers, with pension assets of around EUR 575 billion at the end of 2020. It also is an active infrastructure investor on behalf of its Dutch pension fund clients, with around EUR 16.5 billion invested since 2004 and over 35 direct stakes in portfolio companies. The company was previously reported to be in early-stage talks with investors Brookfield and PGGM on a potential bid for all of KPN.
The joint venture sees KPN accelerate its plans to cover smaller towns and villages, which to date it has left mainly to other players on the FTTH market such as Delta Fiber and residents' cooperatives. Competition has been heating up on the Dutch market though, and operators are starting to duplicate each others' plans as fewer uncovered areas remain.
Telecompaper is organising on 07 April a deep-dive webinar on the FTTH market in the Netherlands. Based on our recently published report 'FTTH in the Netherlands 2021', the webinar will look at the latest market developments and future projections. Interested participants can register on the Telecompaper website.
