Covage wins second FTTH contract in Seine-et-Marne

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French company Covage has been awarded a contract with the local government to deploy a fibre-to-the-home (FTTH) network in Seine-et-Marne, a département located to the east of Paris.

Covage will sell a variety of dark and lit fibre services to retail service providers over the network, which will pass 319,000 homes once it is complete. The aggregate investment over the 25-year contract term is expected to reach in excess of €350 million.

The services will be deployed and managed under two legal frameworks: the délégation de service public (DSP) and the operating contract.

Covage will own, build and operate a network segment, which passes 169,000 homes, under a 25-year DSP which will see Covage fund a portion of the build cost.  The DSP is the legal framework in France that is used for the majority of regional networks Covage currently operates.

Under the operating contract, Covage will extend services to an additional 150,000 homes and maintain the network segment that is owned by the government. Funding for the build of this network segment will be provided entirely by the government with a license fee to be paid by Covage to the government over the life of the agreement.

The new network builds on established deployments in Seine-et-Marne, where Covage has owned and operated the Sem@for77 regional network since 2006. In addition, Sem@for77 will have exclusive rights to provide active fibre services to the 1,733 enterprise sites that the new FTTH network will pass, which will expand Sem@for77's addressable enterprise customer base by over 15 per cent.

The 6,200 km network will incorporate newly built infrastructure, rental of existing ducts and related infrastructure and the lease of existing fibre from Sem@for77.

Network construction is expected to begin later this year.  By 2025 Covage plans to pass approximately 90 per cent of homes under the DSP framework and the local government plans to pass approximately 70 per cent of homes under the operating contract.

The network will be funded by a combination of private capital, operating cash flow and government grants.  Axia, as a 50 per cent shareholder of Covage, expects to provide up to €17.0 million in capital over the next five years, of which €5.0 million will be spent in 2015. However, as Covage is in active talks with potential lenders, it is possible that Axia may be able to reduce its contribution. Covage's other 50 per cent shareholder is the Luxembourg-based Cube Infrastructure Fund.

Art Price, chairman and CEO of Axia, said: "We continue to view FTTH as a major opportunity for Covage and the Seine-et-Marne win reinforces this view.  We look forward to further network wins expanding the scale of Covage's FTTH operations, with the potential to significantly increase the number of homes Covage passes or has under construction, which now stands at 354,000."

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