According to the latest figures, just 26 percent of German households currently have the option of booking an Internet connection via fiber optics.
(Photo: dpa)
Frankfurt, Hamburg According to financial sources, the Baden-Württemberg utility EnBW is planning to sell a stake in its fiber optics subsidiary Plusnet. The energy supplier bought the Cologne-based company with around 25,000 business customers from QSC AG in 2019 for 230 million euros.
However, given the large investments needed to expand the network, EnBW is now on the lookout for an investor who could bring in new equity and in the process possibly take over majority or all of the company’s shares, according to people familiar with the matter.
According to the circles, the Dutch investment bank ING, which has accompanied a large number of fiber optic deals in its home country, is supporting EnBW in the sales process, which is scheduled to officially start in early 2023. EnBW and ING declined to comment.
EnBW is not completely exiting the fiber optics business
In financial crises, infrastructure investors with existing fiber optic investments are considered potential buyers of Plusnet. However, EnBW is not completely divesting itself of the fiber optics business. With its subsidiary Netcom BW, which focuses primarily on Baden-Württemberg, the company remains in the market.
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However, the nationwide ambitions that EnBW was pursuing with Plusnet are being scaled back – also in view of the billions in investments that EnBW has to make to expand the electricity infrastructure. High losses at the gas trading subsidiary VNG are also causing problems for the group. On Friday, EnBW lowered its profit forecast for 2022 in view of its problems.
Plusnet has more than 6,500 kilometers of its own fiber optic lines and, through cooperation with Gasline and DB Broadband, has access to more than 50,000 kilometers of networks that run alongside gas pipelines and railway lines.
In its expansion projects, Plusnet focuses on commercial areas in North Rhine-Westphalia, Hesse, Rhineland-Palatinate and Bavaria. By 2030, the company wants to manage up to half a million fiber optic connections. In September, the company also signed a contract with fiber optics Plus, a joint venture between Deutsche Telekom and the investor IFM, to expand its own offering.
More and more alliances with investors
With its plan, EnBW follows the example of other telecommunications groups and suppliers. Companies often lack the financial strength to manage the investments in ultra-fast lines on their own.
At the same time, the financing of fiber optic expansion is currently extremely popular with investors due to the stable returns from the business. Most telecommunications companies are also heavily indebted and have little leeway to get billions in loans for fiber optic companies.
For this reason, Vodafone recently joined forces with the French Altice to supplement its television cable network with a modern fiber optic infrastructure. The electricity company Eon had brought the investor Igneo Infrastructure on board to expand the fiber optic range of its subsidiary Westenergie. Stadtwerke Garbsen and frt Investor Palladio also formed a fiber optic joint venture; Giganetz sealed a cooperation with the Deutsche Bank subsidiary DWS.
Still big gaps in fiber optic expansion
The wave of deals can also be explained by the fact that Germany is lagging behind when it comes to fiber optics. While countries like Spain opted for widespread expansion early on, providers like Deutsche Telekom or Vodafone preferred to further exhaust their – largely written off – copper infrastructure.
For a long time they shied away from the expansion investments, which are particularly high in Germany because the cables are usually laid underground. Federal and state governments are now supporting the expansion of fiber optics through funding programs.
There is still a lot of room for improvement: According to the latest figures from the Federal Association for Broadband Communication (Breko), just 26 percent of German households currently have the opportunity to book an Internet connection via fiber optics. The differences between the federal states are significant: while around 61 percent of households in Schleswig-Holstein are supplied with fiber optics, this only applies to around ten percent of households in Berlin.
In the summer, as part of its “gigabit strategy”, the federal government set the goal of providing 50 percent of all households and companies with fiber optics by 2025. After all, by 2030 the whole country should be supplied.
While large providers such as Deutsche Telekom, Vodafone or Telefónica have launched investment projects with the help of external investors, there are dozens of smaller providers with their own ambitious plans. Industry experts expect a wave of mergers among regional players over the next few years. Plusnet could become such a deal.
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