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Telefonica Deutschland said the loan will fund the construction of its 5G network and densify its LTE coverage
In December last year, Telefonica selected Huawei and Nokia as suppliers of its 5G RAN equipment and annouced its two-year plan for rapid 5G deployment.
With the German government still sitting on the fence over whether to allow Huawei access to the nation’s network infrastructure, the decision to work with two suppliers is partly a move to minimise risk as Telefonica Deutschland moves ahead with its network deployment.
This contrasts with Deutsche Telekom, which halted further deals to buy 5G gear altogether, earlier that month. This somewhat conservative strategy is their privilege as the market leaders, however, having already launched 5G in a number of cities.
Now, Telefonica Deutschland has secured a loan of €450 million from the European Investment Bank to be directed towards its 5G ambitions, perhaps in an effort to gain ground on the German incumbent.
The funds will be used to increase investments in its 5G and LTE networks as part of their rapid expansion plan for the next two years. Rural areas are to receive better coverage of LTE, while 5G rollout in urban areas will be accelerated.
Telefonica plans to launch 5G in Berlin, Hamburg, Munich, Cologne and Frankfurt later this year, with a total goal of 30 cities and 16 million people by 2022.
As part of the plan, the company also hopes to increase sales and profitability by 5%, with those gains also being reinvested in their expanding network.
This loan follows an even larger one for late 2019, when Telefónica Deutschland concluded a syndicated ‘sustainability-linked’ loan of €750 million in December of last year, with interest rates tied to the company’s ability to meet ESG (Environment, Social, and Governance) criteria.
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