EU financial injection worth millions for German fiber optic expansion

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Around half a million customers, including in rural areas, are soon to receive superfast Internet access thanks to EU funding. The European Investment Bank (EIB) announced on Friday that it would be providing the North Rhine-Westphalian telecommunications company Deutsche Glasfaser with a loan of 350 million euros.

This is intended to enable the company to expand its network in Germany and to close the gaps. The aim of the financial injection is to make broadband Internet available to around 460,000 households and companies in rural areas where there are still no high-capacity networks.

Many can only dream of such bandwidths

The connections are expected to deliver bandwidths of up to 10 GBit/s, speeds that most consumers in this country and in the EU can only dream of. The average download speed in most European countries is currently 100 Mbit/s or less.

The money comes from the InvestEU funding pot, which the EU set up as an aid program during the coronavirus pandemic. The aim is to provide long-term financing by mobilizing private and public funds to support the EU's political priorities.

"This investment will help bridge the digital divide and enable companies to expand and create jobs," said EU Commissioner for the Economy Paolo Gentiloni. "This is a concrete example of a Europe that invests in the future and leaves no one behind."

Better digital services in rural areas make life there easier and the regions themselves more attractive, emphasized EIB Vice-President Nicola Beer. "They also secure jobs and help people and businesses to realize their full potential."

Additional billions secured

Areas supplied with fiber optics would be future-proof and "equipped for the growing data hunger of modern Internet applications – from cloud computing to teleworking to distance learning – and for new technologies such as virtual reality and the Internet of Things".

In addition to the EIB loan, Deutsche Glasfaser has secured billions in financing from commercial banks since 2022. The Group recently announced that it had secured additional debt financing of EUR 1.25 billion for network expansion in rural and suburban areas.

Positive signal effect on other lenders

The company's shareholders, the Swedish investment group EQT and the Canadian pension fund Omers, intend to supplement this financing with equity commitments. The Group has currently installed a good two million connections and is targeting over three million by the end of 2026. According to the EIB, the new loan should now also send a "positive signal to future lenders".

Unlike in other European countries, the expansion of fiber optics in Germany has been "rather sluggish to date", notes the EIB. In 2023, coverage was only 35%, compared to an average of 64% in the EU plus the UK.

The project thus contributes to Germany's digital strategy and the EU's "digital compass". According to this, all households should be able to book gigabit-capable connections by 2030. Deutsche Glasfaser is primarily active in rural areas and describes itself as the leading provider of fiber-to-the-building (FTTB) connections in this area.

The Group supports cooperation with other network operators on the basis of open access, but complains about the increasing duplication of expansion by Deutsche Telekom.

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