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Chinese telecoms giant ZTE to build new fibre optic networks in Germany
China’s ZTE to construct networks in under-served areas of Germany
Michael Marray 22 Nov 2017

CHINESE telecoms giant ZTE Corporation is teaming up with Dutch-owned Bouwfonds Investment Management (Bouwfonds IM) and German internet infrastructure provider Breitbandversorgung Deutschland (BBV) to expand the fibre optic network in under-served areas of Germany.

Under a co-operation agreement signed between the three parties, Bouwfonds Communication Infrastructure Funds II (BCIF II) will undertake the financing of the joint projects. The networks built by ZTE Deutschland will be marketed and operated by BBV. The financial advisor to BBV will be the Infrastructure & Energy Division of German private bank Berenberg.

By joining forces, the three companies plan to close existing supply gaps in undersupplied regions by building high performance – or so-called “future proof” – networks.

The first small step will involve a two-digit million amount being made available to the co-operation partners for joint projects. BCIF II has around 500-600 million euros to invest in passive telecommunication infrastructure, such as fibre optic networks, broadcasting towers and data centres.

The first BBV project will be the installation of a fibre optic network in the city of Bretten near Karlsruhe, in southern Germany. The network, which is already being marketed, is being jointly planned and built by BBV and ZTE Deutschland.

BCIF II will purchase the passive infrastructure upon completion, and BBV will then lease and operate the network. In the context of their co-operation the partners have already identified potential expansion clusters in the Nordbaden region and in the Rhine-Neckar metropolitan region, whose cities include Mannheim and Heidelberg.

“Europe’s strongest national economy also needs the highest-performing digital infrastructure, also in rural areas,” comments Sun Jie, general manager of ZTE Deutschland GmbH at the November 7 signing ceremony.

“It is our declared goal to promote Germany on its journey into the gigabit society and to drive the building of a gigabit infrastructure in our role of a global technology leader for broadband technologies,” he adds. ZTE has already been active in Germany for more than twelve years.

“The investment in Bretten is an example of our investment strategy,” explains Peter Selgert, director, asset management communications infrastructure at Bouwfonds IM. “BCIF II invests in infrastructure in undersupplied rural areas. The objective is to build a comprehensive regional fibre optic network by joining multiple partial networks, supplying both private households and businesses with high-speed internet.”

Manfred Maschek, managing director of BBV Deutschland, noted that the venture can achieve very stable cash flows based on a careful structured approach and, above all, limit the development risk for all parties involved. The investor will only purchase the infrastructure in each case after it has been completed.

Private financing is expected to play a growing role in building fibre optic networks in regions where high-speed internet is not available everywhere, or not at all. The necessary investment volume for a comprehensive expansion of fibre optic networks is estimated at between 70-80 billion euros, and cannot be borne by the network operators alone.

Founded in 1985, ZTE is listed on both the Hong Kong and Shenzhen Stock Exchanges. In 2016, ZTE had revenues of 101.2 billion yuan (US$16 billion), bolstered by growth in the company’s carrier networks and consumer businesses. The vertically integrated company covers each sector of wireless networks, core networks, access & bearer networks, terminals and provides integrated end-to-end solutions for its customers.

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