KKR to Acquire Telefónica Chile’s Wholesale Fiber Optic Network to Create First Open Access Network in Chile
KKR, a leading global investment firm, today announced it has entered into an agreement with Telefónica, a leading global telecommunications company, to establish Chile’s first open access wholesale fiber optics company with the mission to bring greater broadband access across Chile.
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Under the agreement, KKR will acquire a majority stake in Telefónica Chile’s existing fiber optic network, the largest fiber optic network in Chile, and make that network open access through a newly established independent Chilean company with assets managed locally. Telefónica will hold a 40% stake in the business. The newly formed enterprise will serve as Chile’s first wholesale digital infrastructure network open to all current and future telecom operators in Chile, creating a competitive marketplace benefitting consumers and businesses across the country.
Despite Chile leading Latin America in GDP per capita, it is currently third-ranked in fiber-to-the-home connectivity. Fiber optic service offers very high reliability and speeds 10-1000 times faster than cable and legacy telecommunication networks.
Upon approval, the new business plans to expand broadband coverage in Chile from 2 million households today to a minimum of 3.5 million households by 2023, and to provide wholesale service to more than 40,000 businesses, telecom towers, and small cells. The newly formed network will provide access to under-served areas with more than two-thirds of households covered by the network being outside of high-income urban areas.
“We are excited to be working with Telefónica to create the first-ever open access wholesale fiber network in Chile. This will create competition where none exists today, helping Chilean families, companies, and the economy recover and grow in the digital economy,” said Waldemar Szlezak, senior leader on KKR’s infrastructure investment team.
Alfonso Gómez Palacio, CEO Telefónica HispAm, added, “This transaction demonstrates the value of our infrastructure and our willingness to contribute to the sustainable development of the fiber 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 fiber-optic deployment. 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.”