Vodafone Germany to boost broadband network with €2 billion plan

Vodafone Germany to boost broadband network with €2 billion plan”

Vodafone Germany announced plans to invest an extra Euro 2 billion by the end of 2021 to roll out gigabit broadband services.

Vodafone Germany says it's going to invest around €2 billion extra on ultrafast fibre broadband in Germany (above what it was already planning) by the end of 2021.

While the investment will strengthen Vodafone Germany's broadband services proposition, it will also provide it with additional data transport network capacity that could be used for mobile backhaul purposes, an important consideration as enhanced 4G LTE services are rolled out and early 5G services are planned. Including Deutsche Glasfaser, those companies will take responsibility for deploying the passive infrastructure while Vodafone focuses on operating the network and providing services to customers.

The remaining Euro 0.2 billion will be spent on delivering gigabit speeds across Vodafone's 12.6 million cable July Vodafone launched the new top speed of 500 Mbps on its cable network, which already reaches over a fifth of the footprint. Under these agreements, the partner (and in some cases Vodafone itself) will deploy the passive fibre infrastructure; Vodafone will operate the resulting network and supply services to the customers, but over the longer term it plans to take full ownership of the passive infrastructure. The project is consistent with our strategic goal to become a leading converged communications operator in Germany, enabled by a best-in-class gigabit network infrastructure'.

Vodafone's announcement follows Deutsche Telekom unveiling of a new FTTH offering last week.

Vodafone's Gigabit Investment Plan comprises three related initiatives.

A minimum take-up of around 40 percent of businesses within each park will be required before the roll-out can proceed, the operator warned.

Vodafone said it is hoping for a boost of between one and two percent to its service revenue growth rate in the 2019/2020 financial year, an estimated internal rate of return of over 20 percent and a payback period of four years per business park and six years per municipality.

With its latest scheme, Vodafone would spend another €200 million ($240 million) on upgrading cable infrastructure across its entire German footprint of 12.6 million homes, using a next-generation cable network technology called DOCSIS 3.1. Overall, the investment should add 1-2 percent to mid-term service revenue growth at Vodafone Germany and above-average EBITDA margins. Build-outs will only begin once around one third of the homes in a municipality have committed to buy fibre services. This will double the top speed available to customers, from 500Mb/s launched in July this year, up to 1Gb/s. Customers in the largest German cities will be able to order gigabit connections starting in 2018.

Vodafone shares closed up 0.9 percent at 215.69 pence. The initiative is expected to cost EUR200.0 million, with a payback period of less than four years. In the most recent fiscal year, Vodafone Germany generated €10 billion in service revenues, with 39 per cent coming from its fixed-line business.

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