KKR, a private equity firm, and Deutsche Telekom Capital Partners (DTCP), an investment manager with backing from Deutsche Telekom, today announced they have entered into an agreement with T-Mobile Netherlands to launch a joint venture known as Open Dutch Fiber. Specifically, Open Dutch Fiber will be a fiber-to-the-home (FTTH) platform 100% owned by both KKR, as majority shareholder, and DTCP as minority shareholder.
Open Dutch Fiber – KKR and DTCP Joint Venture
Open Dutch Fiber will deploy fiber infrastructure in the Netherlands, to urban and higher population density areas. Indeed, this includes providing both households and businesses with fiber-based broadband services. Overall, the joint venture will deploy fiber-to-the-home (FTTH) to a minimum of 1 million homes in the Netherlands by 2025.
Open Dutch Fiber will begin operations in Q2 2021, with a capital expenditure plan to deploy €700m, through a combination of debt from commercial banks and equity from KKR and DTCP. Ultimately, the goal is to upgrade T-Mobile Netherlands’ network to be capable of delivering speeds of 1 gigabit per second.
Open Access Wholesale Fiber Network
Open Dutch Fiber is structured as an open access wholesale fiber network. Therefore, the network will be open for any third-party operator to use on a wholesale basis. In turn, this structure enables attractive economics for operators and better prices for consumers, given increased competition. Indeed, Open Dutch Fiber represents another example showcasing the growing trend to share digital infrastructure.
Open Dutch Fiber will be led by Jordi Nieuwenhuis and Uwe Nickl, who were formerly co-CEOs of Deutsche Glasfaser in Germany. Notably, Deutsche Glasfaser was sold by KKR Infrastructure to EQT Infrastructure and OMERS in February 2020. Therefore, KKR is teaming-up once again with Nieuwenhuis and Nickl on the Open Dutch Fiber joint venture.
At Deutsche Glasfaser, Nieuwenhuis and Nickl led the roll-out of fixed broadband infrastructure to more than 1 million homes and 6.0k businesses.
Anchor Tenant for Open Dutch Fiber – T-Mobile Netherlands
KKR and DTCP, through Open Dutch Fiber, have signed a 20-year agreement with T-Mobile Netherlands as its anchor tenant.
T-Mobile Netherlands – Overview
T-Mobile Netherlands is the second largest, of the three main wireless carriers in the Netherlands, with 6.8 million mobile subscribers. Indeed, KPN is the largest wireless carrier and VodafoneZiggo is the third prominent provider. Additionally, T-Mobile Netherlands is the third largest fixed broadband provider with 682k customers, behind both VodafoneZiggo and KPN.
The Netherlands Upgrades to Fiber Infrastructure
Notably, the Netherlands’ fixed broadband market remains predominantly serviced by both copper and hybrid fiber-coaxial (HFC) infrastructure. T-Mobile Netherlands is among a few providers, including KPN, DELTA Fiber (owned by EQT), and L2Fiber that are rolling-out fiber infrastructure in the country.
As an example, over the past 18 months, T-Mobile Netherlands, together with Primevest, announced their plan to build fiber for 130k households in The Hague, Eindhoven, and Rotterdam. Of these 130k households, more than 50% (i.e., 65k+) have already been passed with fiber infrastructure.
KKR – Overview
KKR is making the investment into Open Dutch Fiber through its $7.4bn Global Infrastructure Investors III Fund. Overall, KKR has broad global experience in digital infrastructure, including investments in FiberCop in Italy, Hyperoptic in the UK, Deutsche Glasfaser in Germany, Telxius in Europe & Latin America, Hivory in France, Global Technical Realty in Europe, Telefónica’s fiber InfraCo in Chile, Bharti Infratel in India, and Pinnacle Towers in the Philippines.
Deutsche Telekom Capital Partners (DTCP) – Overview
Deutsche Telekom Capital Partners (DTCP) has $1.0bn of assets under management, through which it invests in European digital infrastructure. Specifically, DTCP focuses on the three digital infrastructure sub-sectors of towers, data centers, and fiber.
Within digital infrastructure, the firm has invested in Swiss Towers (alongside Cellnex) and Community Fibre (alongside Warburg Pincus).
Transaction Advisors – Deutsche Telekom, T-Mobile Netherlands, KKR and DTCP
Deutsche Telekom and T-Mobile Netherlands’ financial advisor was Morgan Stanley. Additionally, Deutsche Telekom and T-Mobile Netherlands’ legal advisor was De Brauw Blackstone Westbroek.
KKR and Deutsche Telekom Capital Partners’ (DTCP) legal advisor for Open Dutch Fiber was Clifford Chance.