September 14, 2018 / 1:41 PM / 8 months ago

Innogy to muscle into local broadband market -COO

* Aims to spend more than 200 mln euros a year on broadband

* Has kept more than 90 pct of concessions so far in 2018

* No increased staff fluctuations ahead of E.ON-RWE deal (Recasts, adds board member comments, context)

By Christoph Steitz, Tom Käckenhoff and Vera Eckert

ESSEN, Germany, Sept 14 (Reuters) - German energy group Innogy is planning to more than double its investments to expand into broadband, one of its board members said, hoping to grab business from telecoms providers that it says have neglected rural areas.

Germany has been slow in building out high-speed internet infrastructure, stoking fears that Europe’s largest economy is falling behind in a global push in which industries increasingly rely on digital technology.

Innogy, which was carved out from RWE two years ago, said it would spend more than 200 million euros ($234 million) a year on building glass-fibre connections, up from 100 million euros previously, Hildegard Mueller told Reuters.

Mueller - head of Innogy’s Grid & Infrastructure unit which accounts for 69 percent of total operating profit - said the German government had long relied on Deutsche Telekom and its peers to manage the broadband expansion.

“However, they have not focused on rural areas but mostly on highly populated centres and have done so only inadequately,” Mueller, 51, said, adding Innogy had so far enabled about 1 million people to get access to broadband.

“So far, we have installed fibre-optic cables so it reaches the distribution box - now we increasingly target households to offer our products.”

Once built, Innogy can grant access to its broadband connections to other telecoms providers for a fee or simply offer its own services.

Mueller said there was no increased fluctuation among employees ahead of a planned breakup that will see Innogy’s retail and networks business go to rival E.ON, while parent RWE will keep Innogy’s renewables unit.

Even though Innogy has no say in the transaction, Mueller said the group’s strong position in the networks and infrastructure segment meant it was confident about upcoming talks with its future owner, Mueller said.

“We can enter discussions with E.ON with our heads held high,” she said, adding that the group was keeping full control of its operating business, including potential M&A transactions, until the deal is expected to close in 2019.

Mueller said Innogy had been able to extend or keep more than 90 percent of concessions in its distribution business so far this year, adding it won six new ones in the German states North Rhine-Westphalia and Schleswig-Holstein. ($1 = 0.8545 euros) (Editing by Arno Schuetze and David Evans)

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