Telefonica in exclusive talks with investor for Brazil fibre unit

RIO DE JANEIRO, BRAZIL – Telefonica is in exclusive talks with a financial investor about forming a joint fibre optic venture in Brazil, Chief Operating Officer Angel Vila said on Thursday, February 25th.

The Spanish telecoms group is planning to expand high speed fibre coverage to more Brazilian cities, following a similar project launched in Germany in partnership with insurer Allianz.

“Brazil is the size of a continent. Our capital expenditure (capex) won’t reach it all,” Vila told Reuters.

After speaking to numerous potential partners, the company has entered exclusive talks with an “international operator with a financial and infrastructure profile”, Vila said, declining to name the investor.

Talks have advanced, he added, but “in these situations you can never say 100% that you are going to sign.”

Earlier Vila told analysts that a second stage of the development could be undertaken through agreements with fibre owners like American Tower.

Telefonica already uses the bigger U.S. firm’s infrastructure in the Brazilian state of Minas Gerais, and Vila said they “might be interested in consolidating” that agreement.

Vila said he could not confirm a Bloomberg News report that the exclusive talks were being held with the Canadian pension fund Caisse de depot el placement du Quebec (CDPQ), because of a confidentiality agreement.

“CDPQ is a top-class long-term global investor, that would be very attractive,” he added.

American Tower did not immediately respond to a request for comment. CDPQ could not immediately be reached.

Telefonica plans to hold half of the business through Telefonica and its local arm Telefonica Brasil.

Vila told analysts on a conference call it may expand the unit later through acquisitions.

Telefonica cut its dividend after reporting a 10% fall in 2020 earnings earlier on Thursday, even though it expects its business to stabilise this year.