Big talk on broadband By Mary Lennighan, T

Big talk on broadband


By Mary Lennighan, Total Telecom

Friday 25 July 2014


Vodafone insists fixed-line push is not just about boosting mobile business, Sky buys European businesses, and EE publishes Q2 numbers.



"Vodafone today is one of the largest providers of fixed broadband services in Europe," Voda CEO Vittorio Colao said on the mobile operator's Q1 results call on Friday morning.

That's a bold claim.

But with 8.7 million fixed broadband customers in Europe as of the end of June, Vodafone is justified in putting itself in the big leagues. Its broadband base exceeds that of domestic rival BT, which admittedly operates only in the U.K., and is approaching those of bigger players such as Orange and Deutsche Telekom.

Furthermore, Vodafone closed its €7.2 billion acquisition of Spanish cable operator Ono earlier this week, a move that lifts its fixed broadband customer base to 11 million. And, according to Colao, its addressable market in Europe is now 40 million households.

When Vodafone began its fixed-line push in earnest some two years ago, much was made of its ability to boost its mobile business by buying or building fixed assets. Now the discussion has changed tack: Vodafone is looking to build up a fixed-line position in its own right.

"We want to create value in our fixed business, not simply defend the value in our mobile business," Colao confirmed on Friday.

Vodafone's fixed service revenue in Q1 was flat at £1.7 billion, but it accounted for 18% of group service revenue, up from 13% a year earlier.

And that percentage is likely to grow going forward.

Voda on Monday announced a fibre network rollout deal with Portugal Telecom that will see the pair extend coverage to a further 900,000 premises. That agreement was Vodafone Portugal's second in three months. In May it partnered with DTS Telecom to extend its reach by 200,000 premises.

There has also been talk of Vodafone launching a consumer fixed broadband offer in its home market. Colao continued to play his cards close to his chest on Friday, but his comments suggest that a U.K. launch could be in the offing.

"We clearly want to be competitive in the [UK] consumer market," he said.

Indeed, major domestic rival EE is already making its presence felt in the fixed broadband market. On Friday it announced that it added 30,000 fixed broadband customers in the three months to the end of June, taking its total base to 775,000.

Meanwhile, BSkyB is continuing in its quest to build broadband share in the U.K. The satellite operator on Friday revealed it recorded 341,000 broadband customer additions in the year to 30 June, lifting its broadband base to 5.2 million.

In addition, Sky announced the £5 billion acquisition of Sky Deutschland and Sky Italia, a move that will help it generate economies of scale and lift its retail customer base to 20 million from 11.5 million at present.

With mobile operators fleshing out their portfolios and TV providers building scale, Europe's incumbents could find they have a fight on their hands to maintain their position in the fixed Internet market.

"The only way of discovering the limits of the possible is to venture a little way past them into the impossible."