Deutsche Telecom is years behind Telefonica and Orange/FT bringing fiber to homes, leaving it vulnerable to challengers like Deutsche Glasfaser. OMERS, a Canadian pension fund, and EQT, an affiliate of the Wallenbergs. EQT is partially funded by pension funds.

Uwe Nickl, Group Managing Director, will "focus primarily on the white and gray spots that are still there today - regions that so far could only dream of sustainable and energy-efficient digitization and that we want to send into the fiber-optic age with at least 300 Mbit / s." If Nicki delivers as promised, that is the best news for the German Internet in more than a decade.

Amidst the noise about 5G, few have noticed how fast fiber is growing. France, Canada and Spain are mostly fibered, Italy, Britain & Germany are growing at 20% per year. While AT&T cut back, a nearly unique competitor, Sonic, has fibered much of San Francisco and neighboring areas. PC named them the best ISP in the US.

Of course, nothing compares to the 400 million fiber to the home in China.

Millions of German homes have some of the worst broadband in Europe. About 6 million have little choice but 3 megabit DSL or limited wireless. DT has treated these families as the Romans treated the Sabine women, refusing to upgrade them without ridiculously large subsidies. Another 4 million or so can only get vectored DSL, designed for 100 megabit downloads. 

Glasfaser will now connect millions of these homes at a cost estimated at less than $1500. That's a realistic figure if run efficiently. Telefonica in Spain is connecting apartment buildings at about $400/home; rural Vermont can cost $4,000. Verizon quotes about $500 per home passed, mostly in relatively dense areas.

~67% of Germany can get cable. Most German cable is owned by Vodafone and can deliver a gigabit down but much less up. DT has very little fiber, mostly overlapping with cable.

BT has been clobbered by fiber competition and DT could be next after underinvesting for years.

KKR Sells Deutsche Glasfaser to EQT and OMERS

Under KKR’s ownership, the company has become the German market leader in next-generation digital infrastructure

LONDON--()--KKR, a leading global investment firm, today announces the signing of an agreement with EQT Infrastructure IV fund (“EQT” or “EQT Infrastructure”) and OMERS, for EQT and OMERS to jointly acquire Deutsche Glasfaser (“DG”).

Deutsche Glasfaser was founded in 2011 and KKR acquired a majority position in 2015 from Dutch investor Reggeborgh. Under KKR’s ownership, Deutsche Glasfaser has become the fastest growing provider of gigabit internet connections through fiber-to-the-home (“FTTH”) in Germany. With KKR’s operational and financial support the company invested over €1.2bn in fibre infrastructure and deployment in underserved rural and suburban communities in Germany, increasing connections to more than 600,000 households and 5,000 businesses.

During that period, KKR has provided consistent support to the DG team including through its dedicated Capital Markets team, which has led several successful rounds of financing for the company to support its growth. The investment demonstrates KKR’s unique expertise in growing and expanding businesses in the infrastructure sector while making an important contribution to increasing broadband penetration, supporting SME growth and helping bring market-leading connectivity to underserved communities in Germany.

Vincent Policard, Partner at KKR in European Infrastructure, said: “A big thank you to Uwe Nickl, Jordi Nieuwenhuis and their management team for an incredible journey over the past years. We are delighted to have contributed to this by supporting the growth of a company which has transformed German connectivity, making huge progress in ensuring that all German households and businesses have access to the digital infrastructure necessary to drive economic growth and help societal development. We wish the company continued success in further developing the German gigabit society.”

Uwe Nickl, CEO of Deutsche Glasfaser, said: “I am very happy to have worked with the team at KKR who have helped us immensely over the past few years with our growth journey as a business. KKR’s industry expertise, deep international network and continued support throughout the process has been invaluable, helping us to scale effectively, establish our market-leading position and bring digital infrastructure to more homes in Germany than ever before.”

The investment in Deutsche Glasfaser was made through KKR's Infrastructure Fund II. KKR has been active in the infrastructure sector for a decade and currently has around $20bn AUM. The global infrastructure platform has completed over 30 investments in that period, half of those in Europe, across the energy and utility, transportation and telecommunications sectors. The team is currently investing KKR Global Infrastructure Investors III, a $7.4bn vehicle raised in 2018, and has been active in Europe in recent months with transactions including the acquisition of a majority stake in Hyperoptic, a leading UK fibre broadband provider.

The closing of the transaction is expected in Q2 2020, subject to customary regulatory approval. Morgan Stanley acted as financial advisor to KKR and Clifford Chance served as legal counsel on the transaction.