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Deutsche Glasfaser raises more funds for FTTH rollout
German firm exercises accordion provision to secure €1.25 billion additional debt on top of original €5.75 billion package
Michael Marray 25 Sep 2024

Broadband internet provider Deutsche Glasfaser has secured an additional €1.25 billion (US$1.39 billion) of debt under an existing financing package to support its fibre-to-the-home (FTTH) rollout in rural and suburban Germany.

The group has raised the amount by exercising an accordion agreement on top of the €5.75 billion package agreed in 2021.

Existing and new commercial lenders accounted for €900 million of the total, with the European Investment Bank (EIB) providing the final €350 million under its InvestEU programme.

Deutsche Glasfaser received financial advice from ING and Société Générale, with legal advice from Paul, Weiss, Rifkind, Wharton & Garrison.

The accordion is under the same terms as the 2021 debt package, which was joined by 35 lenders. A group of 10 lenders underwrote and were bookrunners on the original debt package. They were ABN Amro, BNP Paribas, Crédit Agricole, ING, KfW IPEX-Bank, Santander, SEB, Société Générale, SMBC and UniCredit. Five cornerstone lenders were Axa, Generali Global Infrastructure, Kommunalkredit, LBBW and NAB. Another 18 lenders were syndicated – Allied Irish Banks, Bank of China, BNP Paribas Asset Management, CIC, Erste Group Bank, Euler Hermes Kreditversicherungs, Intesa Sanpaolo, KEB Hana Bank, La Banque Postale, Helaba, MetLife, MUFG, Natixis, NIBC Bank, NordLB, Raiffeisen Bank International, Scor and Triodos Bank. BBVA was lead arranger and CIBC a mandated arranger.

The package comprised a €3 billion loan, a €2.5 billion capex facility, and a €250 million revolving credit facility. The accordion facility was available up to €1.5 billion.

After exercising the accordion feature, the company now has €7 billion of debt maturing in 2031, that is complemented by the equity commitments of Deutsche Glasfaser’s shareholders, EQT Infrastructure and Omers. The accordion also contains sustainability-linked elements, including dedicated carbon emission reduction targets, with the company reiterating its commitment to high environmental, social and governance (ESG) standards.

High-speed internet

As an FTTH pioneer and industry leader, Deutsche Glasfaser plans, builds and operates open-access fibre networks for private households, businesses and public institutions. The company aims to roll out fibre networks across the nation, thereby contributing significantly to Germany’s digital transformation.

According to EIB, the project will make high-speed internet available to some 460,000 homes and businesses in rural areas that lack high-capacity broadband.

The network will provide retail internet services with broadband speed of as much as 10 gigabits per second (Gbps) – faster than that to which most consumers currently have access. The average download speed in most European countries is in the range of 100 megabits per second (Mbps) or below. Fibre optic infrastructure can support much higher bandwidth than traditional copper-based broadband technologies like DSL, VDSL or cable.

The project benefits from risk sharing under the InvestEU programme of the European Union. It aims to address a lack of investment in high-speed digital infrastructure in less populated areas, where the costs and risks are typically higher for providers.

“Improving digital services in rural areas will enhance living conditions and make these regions more attractive,” says EIB vice-president Nicola Beer.  “At the same time, it will safeguard jobs and support both individuals and businesses in reaching their full potential. It makes these regions ‘future-proof’ by accommodating the growing bandwidth demands of modern internet applications – from cloud computing to remote work and education – and emerging technologies like virtual reality and the Internet of Things. Bridging the digital divide between rural areas and urban centres is essential to help rural regions compete more effectively, driving both economic growth and social progress.”

Germany has been relatively slow in rolling out fibre broadband networks compared to other European countries. Only about 35% of households reached full-fibre connectivity in 2023 as opposed to an average 64% across the EU and the United Kingdom. This project will support the targets of the German Digital Strategy and the European Digital Compass to provide all households with gigabit connectivity by 2030.