LONDON (Reuters) -Vodafone and Altice launched a joint venture on Monday to challenge Deutsche Telekom by building a 7 billion euro ($6.8 billion) fibre broadband network in Germany.
Vodafone said the FibreCo venture would build a “fibre-to-the-home” broadband network available to 7 million German homes, allowing Britain-based Vodafone to upgrade its existing network in Germany, its biggest market.
FibreCo will invest up to 7 billion euros on the six-year project, which is expected to be 70% financed by debt.
Construction will be contracted to Altice subsidiary Geodesia, with Vodafone Germany responsible for marketing the faster broadband to new customers.
Both companies will own 50% in FibreCo.
The tie-up is subject to regulatory approval and expected to close in the first-half of 2023.
“This partnership builds on Vodafone’s significant next-generation network with Altice’s industrial expertise and proven fibre-to-the-home construction capabilities,” said Vodafone Chief Executive Nick Read.
Vodafone said it would receive cash proceeds from Altice of up to 1.2 billion euros, which would exceed its equity contributions to the joint venture over time.
Read is under pressure from long-suffering investors to improve returns at pan-European mobile and broadband operator Vodafone, and is in talks with CK Hutchison about merging their businesses in Britain.
Altice is the Amsterdam-based holding company bundling the assets of Franco-Israeli cable magnate Patrick Drahi. It already operates fibre infrastructure joint ventures in France, Portugal and Israel.
Shares in Vodafone traded up 0.5% to 100 pence in early deals on Monday.
($1 = 1.0270 euros)
(Reporting by Sarah YoungEditing by David Goodman, Kirsten Donovan)