Telefonica has agreed to sell majority stake in Chile’s existing fiber optic network, the largest fiber optic network in Chile, to KKR, a global investment firm.

The transaction is valued at approximately US$1 billion and is expected to close in the first half of 2021, subject to regulatory approvals.

In 2020, the network, which is being transferred to the newly formed company, was recognized as the Best and Fastest Fixed Network in Chile.

Telefonica will hold a 40 percent stake in the business. The newly formed enterprise will serve as Chile’s first wholesale digital infrastructure network open to all current and future telecom operators in Chile.

Despite Chile leading Latin America in GDP per capita, it is currently third-ranked in fiber-to-the-home connectivity. Fiber optic service offers very high reliability and speeds 10-1000 times faster than cable and legacy telecommunication networks.

The new business plans to expand broadband coverage in Chile from 2 million households today to a minimum of 3.5 million households by 2023, and to provide wholesale service to more than 40,000 businesses, telecom towers, and small cells.

Alfonso Gomez Palacio, CEO of Telefonica HispAm, said: “This transaction demonstrates the value of our infrastructure and our willingness to contribute to the sustainable development of the fiber market in Chile.”

The company will be controlled by KKR and will leverage the firm’s experience in digital infrastructure and in operating and deploying fiber networks, including related investments in FiberCop in Italy, Hyperoptic in the U.K., Deutsche Glasfaser in Germany, Telxius in Europe and Latin America, Hivory in France, Global Technical Realty in Europe, Bharti Infratel in India, and Pinnacle Towers in the Philippines.