John Laing invests in German fibre platform
John Laing Group plc ("John Laing" or the “Group"), the responsible investor and active manager of infrastructure projects internationally, announces that it has executed binding agreements to acquire two regional German businesses (the “Transaction”), in order to create a single platform (the “Platform”) to invest in fibre-to-the-premises (“FTTP”) in Germany.
The Transaction comprises the acquisition of 100% shareholdings in two regional and complementary telecommunications businesses, located in southern and western Germany. These businesses are EFN eifel-net Internet-Provider GmbH and Jobst NET GmbH, and each is in the early stages of FTTP roll-out programmes, focusing on delivering connectivity to under-served suburban and rural communities in Germany. Each business brings key relationships and over a decade of experience and track record of managing telecommunications networks, planning roll-out clusters, deployment and capturing of subsidies in rural areas. Together, with the management teams of these businesses, John Laing will create a single integrated Platform through which to invest further in rolling out FTTP.
John Laing has committed a total investment of up to €30 million (up to approximately £27 million) to acquire control of these two businesses and to fund the initial investment in fibre roll-out programmes over the next 12 months. Given the potential growth of the roll-out strategy, this Platform represents a material opportunity for further investment by John Laing over time, and which could represent a total equity investment in excess of €100 million over the next three years.
This investment fits with John Laing’s strategy of investing in businesses and platforms with growth potential, and which are asset intensive and provide essential infrastructure. This Platform is expected to grow materially through the rolling-out of fibre networks in underserved communities. Importantly this roll-out programme involves a significant greenfield construction component, which aligns well with John Laing’s core greenfield expertise and capabilities.
During the roll-out and construction phase, John Laing will support the management team by leveraging its expertise in developing and financing greenfield infrastructure and actively working with construction partners and other stakeholders.
FTTP is the fastest and most reliable internet connectivity solution available and is critical to facilitate the strongly growing internet bandwidth demands of the future. Germany is currently one of the most attractive growth markets for fibre in Europe, with FTTP penetration rates that are materially lower than other countries in Europe, at around 10% - compared to Spain, Portugal and Norway where penetration rates are around 40% or more; others such as France, Denmark and the Netherlands have penetration rates of at least 25%. The regulatory regime in Germany is supportive, with government-backing for fibre roll-outs that include subsidies as well as a national deployment target. Digital connectivity is fundamental to the achievement of many of the UN’s Sustainable Development Goals, and deployment is key to the German government’s ambitions to improve digital access. Fast, reliable and cost-effective broadband will ensure a more inclusive future for local communities and support economic development, including through the creation of jobs in the construction and operation of the network.
Dr. Jürgen Hernichel, who has worked closely with John Laing on the Transaction, has been appointed by John Laing as Chief Executive Officer of the Platform. Dr. Hernichel brings over 25 years of telecommunications experience, including as Chief Executive Officer of Colt Germany, Deutsche Telekom/T-Systems International and 1&1 Versatel.
The John Laing investment team in Germany is being led by Ronny Juch, who has spent more than a decade working in the German telecommunications and fibre sectors with organisations such as Deutsche Telekom, 1&1 Versatel, Deutsche Glasfaser and Teutel where he built up several FTTP networks, mainly in rural areas. Ronny has been appointed to the Platform’s Board.
Dr. Hernichel and Ronny will work together with the existing management teams of the acquired businesses, as we develop and grow the Platform.
Commenting, John Laing’s Chief Executive Ben Loomes said:
“We look forward to working together with the management team to accelerate the rolling out of high-speed internet access across underserved communities across Germany, and contributing to the German government’s plan to deliver nationwide gigabit internet access by 2025.
Through this transaction, we are investing in a scalable platform which is building essential digital infrastructure in Germany, which is currently among the countries in Europe with the lowest level of fibre-to-the-premises connectivity and which will require significant future investment.
The pandemic and lockdowns have meant that our reliance on digital connectivity has never been greater, and has accelerated the transition to a more digital economy. We believe that the development of fibre-to-the-premises connectivity will play a key role in enabling digital inclusion and sustainable economic growth.
Across the John Laing Group, we have seen a good pick-up in investment momentum in 2021. Total investment commitments in the first quarter of this year amount to £59 million, which is greater than the total annual level of investment commitments in 2020 of £43 million. Currently, we have an additional investment pipeline in 2021 of approximately £160 million of aggregate gross investment commitments, where we are in exclusive, preferred or short-listed positions.”
About John Laing
John Laing is a leading international investor across a range of infrastructure sectors. We seek deliver attractive and sustainable returns over the medium-term. We are a responsible investor, committed to delivering critical and enduring infrastructure which responds to public needs and improves the lives of the communities we serve.
About EFN eifel-net Internet-Provider GmbH
EFN is a full-service provider offering mainly VSDL internet services to retail and business customers in rural areas and towns, predominantly in North Rhine-Westphalia, with a further presence in Rheinland-Pfalz and Baden-Württemberg in the western and southern part of Germany. The company was founded in 1991 and currently has a network covering approximately 13,000 homes passed.
About Jobst NET GmbH
Jobst NET is a full-service provider offering mainly VSDL services to retail, business customers and housing associations in the northern part of Bavaria, Germany. The company was founded in 2008 and currently has a network covering approximately 10,000 homes passed.
 Source: IDATE for FTTH Council EUROPE