The shifting sands of Spain’s fibre market

• Spain has long been a European leader in FTTH deployment
• It still faces some challenges, including an urban and rural divide
• Following last year’s M&A, telcos are now forming joint ventures to drive economies of scale
• Investors still appear keen to take part in the Spanish fibre scene

The Spanish fibre market is evolving as key players plot their buildout strategies and seek to plug remaining gaps in rural coverage to improve network performance. Added to the mix are infrastructure investors that are keen to gain a foothold in the market, even if external market and economic pressures mean they are not as willing to spend as much as telcos might hope.

Spain has long been ahead of the curve in Europe when it comes to speed and delivery of fibre-to-the-home (FTTH) infrastructure. The country had an 88.76% household coverage rate at September 2024, putting it in sixth place across the European Union’s 27 member states plus the UK, according to the FTTH Council Europe’s Market Panorama report. Notably, the coverage rate dropped from 91.9% in the previous year. In terms of the take-up rate, Spain was in the lead with 91.03%.

In spite of this progress, more needs to be done to address issues such as an ongoing digital divide. As identified last year in a joint report by wholesale fibre operator Onivia and Spanish consultancy Nae, rural coverage stands at 80% of households while in urban areas coverage is 96%. In addition, the report found that there is a performance gap between urban and rural areas in terms of download speeds and average latency, with urban areas benefiting from more extensive coverage and a larger choice of internet service providers (ISPs).

In the meantime, the Spanish fibre market has undergone significant structural change, with M&A deals redrawing the telco map. In 2024, MasMovil and Orange Spain merged to form MasOrange, while Vodafone Spain was acquired by UK-based Zegona Communications. In addition, Digi Spain has gained greater prominence in fixed and mobile markets.

Fibre JVs taking shape, with investor interest

This year, the focus has been less on M&A, and more on fibre joint ventures (JVs) between Spain’s three main network operators in order to drive operational efficiencies and economies of scale. MásOrange and Vodafone Spain agreed a fibre joint venture just over a year ago. They have now joined forces with global investment firm GIC on the creation of a FibreCo, which is set to become Spain’s largest fibre optic company.

The FibreCo will be co-controlled by the three partners, with MasOrange holding a 58% stake, GIC 25% and Vodafone Spain 17%. Notably, the stake to be acquired by GIC is less than the 40% the two telcos had initially intended to sell. The venture will combine about 12 million premises with 5 million customers contributed by MasOrange and Vodafone Spain, creating a dedicated FTTH network for both operators.

As part of the transaction, MasOrange will purchase Conexus Networks, the wholesale FTTH access provider in the north of Spain and contribute it to FibreCo.

In a research note, Fitch noted that Vodafone Spain’s participation in the JV “reduces the risk of overlapping network infrastructure and avoids additional network duplication and overbuild in Spain, which may support a more rational market structure”.

Meanwhile, Vodafone Spain has also formed a separate, albeit smaller fibre JV with Telefónica. The JV started operations on 1 March and covers 3.65 million homes and businesses.

Called Fiberpass, it is currently majority owned by Telefónica Group with a 63% stake, while Vodafone Spain owns the remaining 37%. According to a report by Spanish site The Objective, the two telcos have also now “entered the final stretch of the process to bring in an external investor”. The plan is to sell a 40% stake with an estimated value of around €800m. 

Zegona commented that the combination of Fiberpass and FibreCo “will complete the transformation of Vodafone Spain’s fixed-line strategy, delivering full FTTH services nationally. The introduction of a third-party investor into our Telefónica JV and the monetisation of Vodafone’s 37% equity stake in Fiberpass is well advanced”.

In other words, there is a lot going on in Spanish fibre. Outside of the bigger players, there are also several neutral providers and regional players that, in the words of Onivia and Nae, have helped create a “sophisticated ecosystem with a very rich and deep mesh of players and agreements”. The report noted that up to 26 wholesale relationships have been identified amongst key players.

According to Spanish regulator CNMC, the number of installed FTTH access points reached 80 million at the end of 2024, an increase of 1.3 million compared to the previous year.

- Anne Morris, Contributing Editor, TelecomTV