Canadian public pension fund Caisse de Depot et Placement du Quebec (CDPQ) has forged a 50:50 joint venture with Telefonica to forge a new Brazilian fiber optic company.

CDPQ is set to invest US$317mn in the joint venture which will be rolling out and managing networks in mid-sized Brazilian cities. Telefonica Brasil will be contributing an initial fibre network that covers around 1.6 million home, but the new venture FiBrasil is targeting a total of 5.5 million homes by 2025. 

Telefonica Brasil says the FiBrasil will play an instrumental role in the company’s own target of bringing fibre to 24 million homes by the end of 2024, including to greenfield cities.

Telefonica’s Vivo is among the dominant players in the Brazilian telecoms market. The company aims to offer converged services through its consolidated operations and now offers all services under the Vivo brand. The operator is likely to concentrate on encouraging new subscribers to sign up to its broadband services, particularly promotion of mobile broadband.

CDPQ’s investment marks a move away from the sectors state-owned investors have traditionally targeted in Latin America, namely real assets such as utilities infrastructure and real estate. CDPQ also has limited its exposure to the Latin American market to logistics real estate markets and gas pipeline infrastructure.

Brazil is seeing copper networks replaced with fiber connections. The bigger players such as Vivo are set to invest heavily over the next fewe years, with the focus on nationwide 4G coverage, the launch of 5G and the replacement of ageing local copper networks with fiber.

Related funds CDPQ