ZURICH (Reuters) – Sunrise Communications Group and French billionaire Xavier Niel’s Salt Mobile launched a broadband joint venture on Tuesday targeting 1.5 million Swiss households, a new challenge to the country’s largest telecoms provider, Swisscom’s.

FILE PHOTO: Internet LAN cables are pictured in this photo illustration taken in Sydney June 23, 2011. REUTERS/Tim Wimborne/File Photo

The former rivals pledged to invest up to 3 billion Swiss francs ($3.1 billion) over the next 5-7 years in a “fiber to the home” platform focused on underserved areas.

According to Switzerland’s regulator, Swisscom had 51.3% broadband market share to close 2018, compared to 11.5% by Sunrise and 17.7% by Liberty Global’s UPC.

Sunrise Chief Executive Andre Krause said the joint venture, called Swiss Open Fiber, aimed to take on a large minority financial partner and talks with investors had begun.

It comes as movement restrictions to halt the spread of COVID-19 underscore the role of home broadband, with many of Switzerland’s 8.6 million people working from home.

Sunrise said it would get support in set-up and operating activities from Swiss Fibre Net, which is owned by shareholders including Lucerne and Bern utilities and is pushing an independent broadband network accessible to all providers.

“While Salt and Sunrise will act as anchor tenants, the infrastructure network will be offered to all retail operators,” Sunrise said.

The joint venture will be headed by Marc Furrer, head of Switzerland’s federal telecommunications regulator until 2016.

“Swisscom has practically a monopoly in ‘fiber to the home’,” Furrer said. “Movement will come into the market only with infrastructure competition.”

Swisscom did not comment directly on the deal, but said it had invested about 16 billion francs in networks and information technology in the last 10 years, including landlines to about 74% of all homes and businesses in Switzerland.

Krause ruled out a renewed Sunrise-Salt merger bid after Swiss authorities blocked a merger with Salt predecessor Orange a decade ago. “That’s not something we’re planning to do,” he said on a call.

In a previous attempt to gain broadband infrastructure, Sunrise made a $6.3 billion bid for UPC before the Swiss company’s shareholders blocked it last year.

Reporting by John Miller; editing by Thomas Seythal, Louise Heavens and Philippa Fletcher

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