Using muon spin rotation (muSR) and infrared spectroscopy we investigated the recently discovered superconductor K0.73Fe1.67Se2 with Tc = 32 K. We show that the combined data can be consistently described in terms of a macroscopically phase segregated state with a matrix of ~88% volume fraction that is insulating and strongly magnetic and inclusions with a ~12% volume fraction which are metallic, superconducting and non-magnetic. The electronic properties of the latter, in terms of the normal state plasma frequency and the superconducting condensate density, appear to be similar as in other iron selenide or arsenide superconductors.
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