Telefonica Brasil (Vivo) has confirmed an agreement for Canadian investment group Caisse de depot et placement du Quebec (CDPQ) to acquire a 50 percent stake in its fibre wholesale network in Brazil, through the company FiBrasil. TEF Infra, a unit of its parent company Telefonica, will take a 25 percent stake in the new company responsible for the construction, development and operation of a neutral fibre network, while Vivo retains 25 percent and will serve as the anchor tenant.
As a result, the three partners expect to accelerate the deployment of FTTH to new locations, while providing network access to third-party tenants. FiBrasil's business plan foresees the coverage of around 5.5 million FTTH homes passed in four years, focusing on mid-sized cities outside the State of Sao Paulo. Telefonica Brasil will contribute some 1.6 million FTTH homes passed.
The operation foresees a total investment by CDPQ of up to BRL 1.8 billion in exchange for a 50 percent stake in FiBrasil and also payments to be made by TEF Infra for a 25 percent stake. This gives an implied valuation of the brownfield assets contributed by Vivo of 16.5x pro forma EBITDA for 2020. CDPQ’s capital, in addition to the expected debt to be raised by FiBrasil, provide a fully funded business plan to achieve the deployment targets, the company said.
Completion of the deal remains subject to regulatory approval and a final shareholders agreement.
