KKR will create a new fiber optic wholesale firm, called On Net, which will combine the networks of PangeaCo, Telefónica and Entel in Peru
Telefónica Hispanoamérica has sold 64% of PangeaCo -the subsidiary through which it manages its fiber optic business in Peru- to KKR and Entel Peru, an operation with which the Telefónica group reduces its net debt by around 200 million euros, as reported by the company in a statement sent to the National Securities Market Commission (CNMV).
Specifically, KKR will take over 54% of Telefónica's fiber optic business in Peru, while Entel will keep 10% and the operator led by José María Álvarez-Pallete will keep the remaining 36%.
As part of the transaction, Telefónica del Perú and Entel will sell to PangeaCo certain assets of their fiber optic infrastructure to the home, while they will sign a series of contracts, among them, for the provision of wholesale connectivity services with both Telefónica of Peru as with Entel Peru.
As explained by the operator, when this transaction is closed the net financial debt of the Telefónica group will be reduced by around 200 million euros. In addition, you will receive "certain variable payments" over the next four years.
KKR WILL CREATE A NEW COMPANY
In this context, KKR will create and control a new fiber optic wholesale company in Peru --to be called On Net Fibra de Perú--, which will combine the fiber optic networks of PangeaCo, Telefónica del Perú and Entel Perú and "will empower for the first time the use of the network to all internet providers" in the country, as reported by the fund in a statement.
In this sense, KKR plans to make an additional investment of approximately 200 million dollars (around 184 million euros) to "more than double the ultra-fast fiber network", going from coverage of around two million homes to 5 .2 million, "with the possibility of contracting the fiber optic service in 86 provinces (of Peru) by the end of 2026."
"Under the terms of the agreement, KKR will acquire a majority stake in PangeaCo, which will subsequently acquire the existing fiber optic networks of Telefónica del Perú and Entel Perú. Through the combination of these networks, KKR will establish On Net Fibra de Peru (new name of the company) to independently build and operate the largest fiber optic network in the country," the fund detailed.
Thus, KKR will control 54% of On Net Fibra de Perú, while Telefónica Hispanoamérica will own 36% and Entel Perú the remaining 10%.
"On Net Fibra de Perú's fiber optic network will be open to all internet service providers, increasing competition in the market. Telefónica del Perú and Entel Perú will be the first clients of the expanded open access network, which will allow both providers to reach a greater number of customers with ultra-high-speed offers. Existing customers of PangeaCo, Telefónica del Perú and Entel Perú will not be affected by the transaction," he explained.
In Peru, 88% of households have fixed or mobile internet access, but less than 35% have access to high-speed fiber optic networks, according to data from different official reports.
In this sense, KKR "commits" to doubling the reach of fiber optics in the network and reaching areas in the interior of the country, as well as low- and medium-income households.
"This operation is possible thanks to the success achieved by KKR in expanding connectivity and greater competition from On Net Fibra in Chile and Colombia. In this first country, the firm was able to expand high-speed internet access to 2.4 million to 3.7 million homes in more than two years, and, in the Colombian market, the advance was from 1.2 million to 2.4 million homes connected in almost two years," the fund highlighted.
KKR's investment will be channeled through the KKR Global Infrastructure Investors III fund and plans to provide operational support to Peru's On Net Fibra through Nexo LatAm, a digital infrastructure business that supports KKR's infrastructure strategy across Latin America.
In this sense, this entire operation still has to be approved by the competent authorities.