Telefónica Deutschland lands loan of €450m for 5G roll-out

Assisting its strategy to expand its reach, and further improving its financing profile, Telefónica Deutschland has signed a loan agreement with the European Investment Bank (EIB) to finance a 5G network roll-out and mobile broadband expansion.

The maturity of the €450 loan is eight years, and in addition to funding the roll-out of the next-generation communications services, Telefónica Deutschland will use the proceeds to finance the further densification of its LTE network.

The new deal is the latest in a smart investment programme started by Telefónica Deutschland in December 2019 which is designed to further improve network quality to accelerate the company’s growth profile.

Telefónica Deutschland said the programme will see it “significantly” increase its investments in the mobile network in 2020 and 2021, with a focus on boosting rural coverage in Germany, primarily with 4G and accelerating urban capacity with 5G.

In November 2019, Telefónica Deutschland announced a partnership with fellow German operators Deutsche Telekom and Vodafone Deutschland to extend mobile coverage throughout the country.

The operators intend to collaborate closely in the future, with the aim of expanding their mobile communications networks to achieve the best possible mobile broadband coverage for customers throughout Germany, especially in rural areas and along road, rail and inland waterway transport routes. This is a condition that the operators are required to fulfil as stipulated in the country’s spectrum auction and subsequent licence allocation.

The loan was concluded via Telefónica Germany and follows the acquisition of E-Plus; the EIB financed the consolidation of Telefónica Deutschland’s mobile network in 2016, with a loan linked to what it described as an ambitious energy-saving target.

In the medium term, Telefónica Deutschland expects its network investments to make an important contribution to improving its sustainability rating. Telefónica Deutschland already concluded a syndicated loan amounting to €750m in December 2019, with the interest margin linked to an external sustainability rating.

The basis of the new deal will be an investment profile that foresees the re-farming of spectrum and efficient use of technologies including the envisaged switch-off of its 3G network by the end of 2022. This is set to be achieved through a two-year, network-focused investment programme that will centre on boosting rural coverage primarily with 4G and accelerating urban capacity primarily with 5G.

The basis will be a smart investment profile that foresees the re-farming of spectrum and efficient use of technologies including the envisaged switch-off of its 3G network by the end of 2022. In December 2019, Telefónica Deutschland named Huawei alongside Nokia as a key technology supplier, in a bid to ensure this aim is realised.