Telefonica and Allianz announced a 50-50 joint venture for the deployment of fiber to the home (FTTH) in Germany and aims to invest 5 billion euros.

The company will operate as a wholesale operator and will deploy local fiber optic networks in rural and semi-rural areas of Germany with low coverage and will offer FTTH wholesale access to all telecommunications service providers.

This investment continues Allianz’s commitment to undertake major fiber deployments in France and Austria.

Telefonica Spain will contribute its experience in network design and operations during the deployment process of this company’s FTTH network. The company will benefit from the power of Telefonica Deutschland / O2’s distribution channels, online and offline, as well as from its status as the first customer and provider of transport infrastructure.

The FTTH company aims to deploy more than 2 million homes passed in rural and semi-rural areas, through a fiber network of more than 50,000 kilometers.

The joint venture foresees investments of up to 5 billion euros through various sources of financing: shareholder contributions, a long-term subordinated loan, and external financing without recourse to shareholders.

Telefonica will invest up to €500 million of capital and Allianz will invest up to €1 billion through different instruments.

Angel Vila, CEO of Telefonica SA, said: “The operation strengthens Telefonica Infra’s value proposition and reinforces the strategy presented by Telefonica one year ago.”

Markus Haas, CEO of Telefonica O2, said that there is a huge potential for the fiber optic market in Germany, as currently less than ten percent of households have fiber connection. The FTHH platform would allow Telefonica to offer powerful fiber optic connections to private and business O2 customers.