Germany: EIB provides EUR 450m loan to Telefónica Deutschland for rollout of 5G network
4 February 2020
It is providing funds for mobile broadband development and strengthening of innovation
Telefónica Deutschland continues to improve its funding profile
EIB makes great sustainability demands on borrowers
Telefónica Deutschland has secured a EUR 450m loan from the European Investment Bank (EIB). The company intends to use the proceeds to roll out an energy-efficient 5G network and to consolidate its LTE network.
In December Telefónica Deutschland announced that it planned to considerably step up its investment in mobile networks in 2020 and 2021. It will substantially increase its network capacity in cities where it intends to remain as market leader. In other cities so-called “white spots” are set to be eliminated in order to gain new customers.
“This loan will make it possible to roll out a fast, energy-efficient 5G network, which will enable us to meet the soaring demand for mobile data from our customers“, said Telefónica Deutschland's CFO Markus Rolle. “We are particularly pleased with our renewed partnership with the EIB, which as the EU climate bank is playing an important role for the future of our planet.”
The EIB only supports financing projects that meet high environmental and social standards. 5G technology enables large volumes of data to be transmitted using less energy per data unit. The EIB's 2016 financing for consolidating Telefónica Deutschland's mobile network was linked to an ambitious energy savings target.
“5G, the next-generation mobile standard, is fast approaching”, said Ambroise Fayolle, EIB Vice-President, in charge of innovation and operations in Germany: “It will produce higher speeds and improve mass connectivity, and both citizens and the economy will also benefit from superfast, reliable networks. It will enormously improve existing wireless applications and open up completely new areas of business. That is the basis for innovation and growth in Europe, an objective that along with climate action is one of the EU bank's top priorities.”
The EIB loan signed with Telefónica Germany GmbH & Co. OHG has a term of eight years and continues to improve Telefónica Deutschland's funding structure. In December, Telefónica Deutschland finalised a syndicated loan worth EUR 750m with an interest margin linked to an external sustainability rating.
Telefónica Deutschland provides telecommunications services for private and corporate customers, and innovative digital products and services in the fields of the internet of things and data analysis. With a total of 50.1 million connections (as at 30 September 2019) the company is one of the leading integrated telecommunications providers in Germany. In the mobile market alone, Telefónica Deutschland manages more than 45 million connections – no other network operator connects more people in the country. By 2022 the company intends to become the mobile customer and digital champion – the preferred partner of customers in the German mobile market – giving them mobile freedom in the digital world. Under its core brand O2 as well as various secondary and partner brands, the company offers post and prepaid mobile products with innovative mobile data services. Its mobile network is based on high-performance GSM, UMTS and LTE infrastructure. Furthermore, in the area of fixed-line networks Telefónica Deutschland markets telephony and high-speed internet products such as VDSL. Since 2012 Telefónica Deutschland Holding AG has been listed on the Prime Standard of the Frankfurt Stock Exchange (TecDAX). In the 2018 financial year, the company generated a turnover of EUR 7.3bn and had nearly 9 000 employees. The company is majority-owned by Spanish telecommunications group Telefónica S.A., whose headquarters are in Madrid. With business activities in 14 countries and a customer base numbering almost 350 million connections, the Group is one of the biggest telecommunications providers in the world.
The EIB is providing Telefónica Deutschland GmbH & Co. OHG a EUR 450m loan for the further development and upgrading of mobile network infrastructure. The aim of the investment is to improve network quality and geographical coverage in order to expand the innovative broadband services available to customers in Germany. This is the first project that the EIB is undertaking with Telefónica Deutschland, which two years ago took over its competitor E-Plus to become one of Germany's three leading telecommunications operators.