FiBrasil (FiBrasil Infraestrutura e Fibra Ótica SA), a neutral wholesale fiber network operator in Brazil, structured as a joint venture between Caisse de dépôt et placement du Québec (CDPQ), a Canadian pension fund, Telefônica Brasil (Vivo), and Telefónica Infra, have acquired fiber company Fiberty 1, formerly known as Phoenix Fiber do Brasil, as reported by TeleSíntese. Fiberty 1 was sold to FiBrasil by its parent company, Phoenix Tower, whose shareholders are Blackstone Tactical Opportunities and John Hancock Life Insurance.

Fiberty 1 (Phoenix Fiber do Brasil) – Overview

The Fiberty 1 network spans 0.9k fiber route miles (1.5k fiber route kilometers), with 170k homes passed. Geographically, this fiber infrastructure spans 11 cities in the Brazilian states of Minas Gerais, Espirito Santo, and Goiás.

Notably, in February 2021, Telefónica disclosed that it had a joint development agreement with Phoenix Fiber for the roll-out of fiber-to-the-home (FTTH) networks in these regions. Indeed, Telefônica Brasil (Vivo) is the anchor tenant of Fiberty 1’s network.

Future Fiber Deployments

As part of FiBrasil’s acquisition of Fiberty 1, FiBrasil will gain another 18 cities where fiber networks are presently under development. These additional cities will comprise ~310k homes passed with fiber, with deployments occurring between Q4 2021 and Q1 2022.

Overall, Fiberty 1’s existing and development fiber networks will ultimately total ~480k homes passed.

FiBrasil – Initial and Upsized Fiber Roll-Out Targets

Initially, Telefônica Brasil contributed an existing fiber network with 1.6 million homes passed, in 34 cities outside the state of São Paulo, to form FiBrasil. Closing of the FiBrasil transaction between CDPQ, Telefônica Brasil, and Telefónica Infra took place in early July 2021.

FiBrasil – Initial Cities

FiBrasil Initial Cities with Fiber in Brazil

Subsequently, FiBrasil’s business plan contemplates deploying 500k fiber-to-the-home (FTTH) passings in the second-half of 2021. In turn, the company will reach 2.1 million homes passed by year-end 2021. Long-term, FiBrasil’s initial goal was to reach 5.5 million homes passed by 2024.

Upsized Targets

Following the acquisition of Fiberty 1 (Phoenix Fiber), FiBrasil is increasing its coverage target to 6.0 million homes passed by 2024, representing a 9% boost.

Strategy

In late July 2021, Telefônica Brasil’s CEO, Christian Gebara, signaled on the company’s Q2 2021 earnings call that FiBrasil will “allow us to look for some possible M&A”. Therefore, CDPQ, Telefônica Brasil, and Telefónica Infra are fulfilling this notion through FiBrasil’s purchase of Fiberty 1.

Telefônica Brasil (Vivo) – Fiber-to-the-Home (FTTH)

FiBrasil represents only a subset of the total Telefônica Brasil (Vivo) fiber network. Indeed, Vivo is the largest fiber-to-the-home (FTTH) provider in Brazil, with a 19.8% market share.

As of Q2 2021, Vivo operates in ~300 cities in Brazil. Within these cities, Vivo passes 17.3 million homes and has 4.0 million fiber broadband subscribers, implying a 23% penetration rate.

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