Seven million connections: Vodafone finds partners for the expansion of optical fiber

Seven million connections
Vodafone finds partners for the expansion of optical fiber

After Telekom, Vodafone now also wants to invest in the expansion of optical fiber. The goal is to make fiber optic connections available in seven million households. They want to partner with Luxembourg-based financial holding Altice on this billion-euro investment.

The need for data is increasing rapidly in the Internet age, stable transmission is extremely important to many people. Fiberglass is seen as the technology of the future. After Deutsche Telekom and other Internet providers, the Vodafone telecommunications group in Germany now wants to enter the large-scale fiber optic expansion. Vodafone announced in Düsseldorf that it plans to set up a joint venture with the Luxembourg financial holding Altice, which will invest up to seven billion euros within six years.

The goal is to make optical fiber available to seven million families, reaching the apartments. The company will be founded in the first half of 2023. These are the so-called FTTH connections (“Fiber to the Home”). So far Vodafone has only a few connections of this type, currently there are just over 40,000. Instead of FTTH, the company relies on television cable as its transmission path. However, pure fiber Internet is considered more stable and faster, which is why such contracts are more expensive for customers.

Vodafone is lagging behind with expansion plans. Deutsche Telekom has already increased its investments in 2020 and is picking up the pace: by mid-2022, Bonn was at 3.9 million. In an intermediate stage, their FTTH network is expected to be available to 10 million households by 2024. The expansion is therefore set to continue, with Telekom also relying in part on a joint venture with Australian investors. Two years ago, Telefónica and the Allianz insurance group announced the establishment of a joint venture that intends to invest five billion euros within six years.

Full fiber optic coverage

Vodafone is now embarking on a similar path to its competitors and is looking to join forces with an external partner to manage the costly fiber optic expansion. The debt that the planned company will assume will not weigh on the balance sheet. 80 percent of FTTH connections should be where Vodafone already has television cables, especially in condos and condos. There, customers then have the option to switch to pure optical fiber. 20 percent will be built where Vodafone landline is not available.

Vodafone chief Nick Read spoke of a major infrastructure investment that will help meet the federal government’s broadband goals. The government wants Germany to have nationwide fiber optic coverage by 2030. In the deal with the joint venture, Vodafone is providing a moderate cash injection, with most of the investment being financed through the joint venture’s debt. . Over the years, Vodafone has received up to € 1.2 billion from Altice for customer access via cable television.

The cash injection that Vodafone is giving to create the company will reportedly be less than the total amount the company will receive. Partner Altice is no stranger to the European internet industry, the financial holding holds shares in telecommunications companies in France and Portugal, among other places. Altice is already active in Germany through its subsidiary Geodesia.

Vodafone also announced that it is providing investment to upgrade its cable TV network. More distribution boxes (fiber optic hubs) must be built and the loading speed must be increased. With its current fixed network, Vodafone already relies heavily on fiber optics. But on the last mile – that is, the stretch to the apartment – there are called television cables. These allow for download speeds of up to 1 gigabit per second.

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