Open Fiber SpA, a wholesale operator of fiber optic networks in Italy, which is backed by Macquarie Asset Management (MAM) and CDP Equity (Cassa Depositi e Prestiti), today announced that its Board of Directors have approved a new business plan for the company with a corresponding total investment of €11bn, as well as a new debt financing commitment of €7.2bn from a consortium of banks.
Business Plan – Open Fiber
Open Fiber’s new 9-year business plan covers a time horizon from 2022 to 2031. Through €11bn of total investment, Open Fiber intends to pass ~24 million total households with fiber infrastructure, equivalent to 90%+ household coverage in Italy.
As a reference point, the company’s target represents 11 million incremental households passed with fiber infrastructure, up from its current passings of 13 million households. Geographically, Open Fiber currently offers its connectivity services in 190 large and medium-sized cities and 3.0k+ towns/rural municipalities across Italy.
As part its fiber roll-out, Open Fiber has set a customer take-up target of 50%. Previously, the company had established a target to attain a total of 7 million customers.
Upon completion of its new business plan, Open Fiber expects to produce margins of >75%, with €2bn+ in revenues. Additionally, Open Fiber forecasts achieving breakeven (i.e., EBITDA net of investments) for 2026.
Open Fiber Deployments in Italy – Black, Gray, and White Areas
Open Fiber will accelerate its deployment of fiber into white areas and extend its network into gray areas of Italy. Based on the European Union’s Broadband Guidelines, each ‘area’ is defined as follows:
- Black Areas: 2+ ultrabroadband (UBB) networks from different operators are present in the area
- Gray Areas: 1 ultrabroadband (UBB) network from a different operator is present in the area
- White Areas: no ultrabroadband (UBB) network from an operator is present in the area
Below are further details on Open Fiber’s deployment plans for black, gray, and white areas in Italy.
Open Fiber’s new business plan will extend very high capacity network (VHCN) coverage to gray areas, starting with those involved in the Government of Italy’s Ministry for Technology and Digital Transition (MITD) tenders, under the Italy 1 Giga Plan (Italia a 1Giga Plan). Particularly, Italy’s 1 Giga Plan allocates a budget of €3.8bn with the goal of providing connectivity at download speeds of 1 gigabit per second and upload speeds of 200 megabits per second, in gray areas by 2026.
Open Fiber intends to bid/participate in all of MITD’s 1 Giga Plan public tenders in Italy, which are scheduled for June 2022. Importantly, Open Fiber’s new €7.2bn debt financing (see below) will financially support the company’s bids in these tenders. As such, the company will have funding for its subsequent fiber passings in these areas.
Based on the outcome of the 1 Giga Plan tenders, Open Fiber will detail its plan for any incremental gray areas in which it will pass, and, in turn, compete with fiber services. To this end, Open Fiber has the ability to draw on an additional credit line of €2.8bn to cover commercial gray areas, depending on the outcome of the tenders. Indeed, this implies that Open Fiber has access to a total of up to €10bn in debt financing.
Black and White Areas
Open Fiber’s new business plan reiterates its operational and financial targets, in black and white areas, to cover 7.0k+ municipalities in clusters C and D, where it acts as public concessionaire. By 2023, the company expects to complete all works in the towns of white areas and, in particular, those covered by the European Union’s European Regional Development Fund (ERDF) and European Agricultural Fund for Rural Development (EAFRD).
Debt Financing – Open Fiber
Open Fiber’s network investments will be funded by an increase in its debt financing to €7.2bn, as well as equity and cash from operations. Specifically, the company will use the proceeds from this new debt financing to i) refinance its existing €4.1bn of debt and ii) support further fiber investments under its new business plan.
The following banks will act as Global Coordinators, Bookrunners, and Mandate Lead Arrangers of Open Fiber’s €7.2bn debt financing: Banco BPM, Banco Santander, BNP Paribas, Crédit Agricole, ING Bank, Intesa Sanpaolo, Société Générale, and UniCredit.
By the end of 2021, Open Fiber intends to close this €7.2bn debt financing, which will ultimately mature in 2028.
Open Access Wholesale Fiber Network
Open Fiber operates and builds an open access wholesale fiber network. Therefore, the company’s network is open to all third-party telecommunications operators and internet service providers (ISPs) to offer broadband services to end users.
Presently, Open Fiber has entered into commercial agreements with 200+ national and international operators, permitting the use of its infrastructure. For example, Open Fiber has signed wholesale agreements with Vodafone Italia, Wind Tre, Sky Italia, and Iliad Italia. At the same time, Open Fiber has a network sharing agreement in-place with Fastweb.