Axia's Covage Wins FTTH Network In Seine-et-Marne

CALGARY — Axia NetMedia Corporation (Axia), which sells services over fiber optic communications infrastructure, announced that its French company, Covage, has been awarded an agreement to partner with local governments to deploy a fiber-to-the-home (FTTH) network in Seine-et-Marne. The network will pass 319,000 homes when complete. The department of Seine-et-Marne has a population of 1.3 million and is located east of Paris, in the region of Île-de-France. Covage owns and operates the Sem@for77 regional network, which is also located in Seine-et-Marne, since 2006.

Covage will sell a variety of dark and lit fiber services to retail service providers, which will enable the delivery of Internet, video and voice services to residential end-users. The services will be deployed and managed under two legal frameworks: the Délégation de Service Public (DSP) and the Operating Contract.

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


• Second, under the Operating Contract, Covage will offer 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.

Sem@for77 to Provide Business Fiber Services
In addition, Sem@for77 has exclusive rights to provide active fiber services to the 1,733 enterprise sites that the new FTTH network will pass. These are potential customers the Sem@for77 network does not currently pass and expands Sem@for77's addressable enterprise market by over 15 percent.

Network Details
The 6,200-km (3852-mile) network incorporates newly built infrastructure, rental of existing ducts and related infrastructure and the lease of existing fiber from Sem@for77. The aggregate investment, totaled over the 25-year contract term, is in excess of €350.0 million. This investment includes the build of the transport and distribution network segments, interconnection with Covage's national backbone and the planned cost to connect subscribers to the network.

Network construction is expected to begin later this year. By 2025 Covage plans to pass approximately 90 percent of DSP homes and the community plans to pass approximately 70 percent of Operating Contract homes.

Axia Funding Requirement
The network will be funded by a combination of private capital, operating cash flow and government grants. Axia, as a 50 percent shareholder of Covage, expects its maximum capital contribution of €17.0 million ($20 million) to be made over the next five years. However, as Covage is in active talks with potential lenders, it is possible that Axia's maximum capital commitment is not reached. Axia is planning a capital contribution of €5.0 million ($5.8 million) in 2015.

"Covage is pleased to have the opportunity to provide FTTH services in Seine-et-Marne, commented Jean-Michel Soulier, president of Covage. "This win builds on our relationship with the community, where we have been delivering fibre services to enterprise customers for close to a decade."

Art Price, chairman and CEO of Axia, added, "Covage is the leading independent, pure-play fiber operator in the French market and we remain excited by the growth opportunity in France. This growth will be driven by Covage increasing its penetration in existing markets and by winning new networks, such as Seine-et-Marne. 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."