Vodafone UK Considers Investing in BT’s GBP15bn Fibre Rollout
The CEO of Vodafone, Nick Read, has reportedly said they are considering becoming an investment partner for BT Group’s £15bn rollout of gigabit-capable Fibre-to-the-Premises (FTTP) broadband ISP technology (here), which is currently aiming – via Openreach – to cover 25 million UK premises by December 2026.
Last week saw BT raise their full fibre coverage target from 20 million to 25 million premises (c.80% of the UK). At the same time the operator indicated that it “could deliver further shareholder value by funding the additional 5m premises through a joint venture with external parties” and would explore Joint Venture (JV) structures over the first half of the current financial year.
Prior to that the CEO of BT Group, Philip Jansen, had previously said that he was “open minded” about the possibility of selling a “minority” stake in Openreach, but at the same time he said that the operator was “not really interested” in a sale and leaseback style agreement.
Advertisement
By comparison Vodafone, which doesn’t have a full fibre network of their own and recently missed an opportunity to merge with Virgin Media (O2 got there instead), has so far been happy to enjoy wholesale access into both CityFibre and Openreach’s respective FTTP networks for their own consumer products.
However, the operator has now indicated to The Telegraph (paywall) that they might be prepared to go a little further and invest in Openreach.
Nick Read, Vodafone’s CEO, said:
“We are actively engaged with Openreach to understand their plans and what they are looking at, but we will explore with many players – not just BT.”
We should point out that CityFibre are reportedly also looking to sell a significant minority stake (worth many hundreds of millions) to a third potential backer (here), although we haven’t heard Vodafone’s name being linked with that, and they may have already lost their best opportunity to get involved (Vodafone were an early backer of the CityFibre’s project, but they’ve since been joined by lots of other ISPs on similar terms).
What’s less clear from all this is what Vodafone might hope to gain from helping to invest in Openreach’s rollout, particularly given that Ofcom’s rules may restrict their ability to extract preferential wholesale terms. Openreach doesn’t strictly need Vodafone in the same way (anchor tenant) as CityFibre did early on, but equally being able to own a piece of the incumbent’s huge project may have its attractions (possibly as part of a consortium). Time will tell.
Advertisement
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
« Ofcom UK Seeks to Expand Range of Indoor Mobile Boosters
RootMetrics CEO Backs Plan to Allow 30 Metre UK Mobile Masts »
Vodafone need their own infrastructure and would be better off buying Cityfibre with its anchor tenants
Didn’t they own C&W at one point?
They do have a legacy unbundled network and fixed business line network, but that’s rather different from FTTP to homes.
Their investors disagree. They announced plans to invest in expending their mobile network yesterday which helped trigger a sell-off.
They’ve lost half their value in the past three years and don’t need to own an FTTP network. The UK market is rapidly becoming one of the most competitive anywhere so offloading the risk makes sense.
We’re going to see a ton of consolidation at some point in the not too distant, the current situation is untenable.
Vodafone has an obscene amount of fibre in the ground, some they seem to not even know they own..
They could easily make substantial progress just building laterals off existing their duct, to be honest. It is all very underutilised for exchange backhaul/mobile masts and a small amount of wholesale which they are horrific at delivering on (wholesale circuits can take a year to install)
Investors disagree because most of them are pension funds that live off Vodafone’s previously generous dividend payments. Investing directly impacts their projected income.
Vodafone building out from their existing network wouldn’t be any cheaper than CityFibre’s build. If anything it’d be more expensive as Vodafone’s network is more national and less metropolitan.
They could make progress, sure, but for a publicly traded company progress is worthless if it doesn’t involve making money. Building out FTTP along existing routes won’t provide the revenue to cover the costs of the extra fibre, distribution equipment, etc.
Given they struck up a deal with CityFibre to relinquish their exclusivity in return for being released from minimum takeup numbers it’s fair to say they won’t jump into spending money on their own build. Much of their fibre network has no properties to build laterals to as it links centres of population rather than running in rings around them.
They do own the old C&W fibre network. But as others have pointed out some of it they don’t even seem to know they own.
C&W engaged with the early BDUK. They had assets in Cumbria (Thus) and an already subsidised network in H&W, which is one of the reasons these areas were chosen. You were hanging in there hoping C&W would stay long enough to make any Framework.
The current enthusiasm by alt-nets, or perhaps the availability of funding is built on the they can recruit 1 in 3 premises passed for full fibre.
I am unclear on the appetite of those on 30-80Mbps services to pay a small premium for 100Mbps + services. I guess the second and third round of funding will be needed to see if the this opportunity is as being assumed.
I am also unclear on what economic rationale BDUK will run procurements to overbuild what they have recently subsidised and where BT have already a settlement with Ofcom. You could happily estimate 50% or more uptake on 2012 business case. It is not at all clear the basis of subsidising something which all these alnets wish to be proven right and make their fortunes.
Cynically – i wonder if a JV is a non starter (Openreach leverage existing structures to increase build but the ROI isn’t enough for the 3rd party) and that this is a marketing strategy to improve perception and give investors confidence.
My general outlook is that if any JV was to be formed it would use Openreach resources to deliver the build, the 3rd party would recoup their investment and trigger a defined buy out by Openreach.
Are Vodafone ever going to provide FTTP over OpenReach or will it only be via CityFibre?
How long may it take CityFibre to build the new proposed rollout areas for Vodafone?
Thanks.
That’s what this whole article is about. Do you need another kick up the arse to read it?
There is a BT (BishopTelecom) logo on my Master Socket.. bend over and look… THWACK!
Well around a year ago on this very site, Vodafone were to make a whopping BIG FTTP OpenReach announcement that failed to materialise.
I am not making this up:
https://www.ispreview.co.uk/index.php/2020/08/isp-vodafone-uk-unveil-openreach-fttp-home-broadband-plans.html
Nobody can get connected via Vodafone FTTP OpenReach especially when your street has been completed and all the neighbours are on 900 Megs on BT, TalkTalk, Sky, etc.
So from what the article says, precisely zero homes will have Vodafone FTTP until 2026 when the first customer will be fanfare connected to the network.
No wonder there is a big stock market Vodafone share sell-off with their management.
There are no milestones for anything from Voda via OpenReach or CityFibre (plus new area rollout proposals last month) other than “2026”
Yet IF i cancel my Voda FTTC I can be on BT/TalkTalk/SKY FTTP by this time next week.
It’s not that unreasonable for Vodafone to tell customers “what to expect and what is going on” having let down customers with mis-selling tactics.
Vodafone Sales Pitch for FTTC is “As soon as FTTP is available in your area you’ll be switched over to it”
This suggests ‘months’ (IE within my contract duration) to me. NOT 5 years time…! If it is 5 years I am leaving Vodafone as FTTP is already HERE outside my house…! Good Lord! 🙂
> Are Vodafone ever going to provide FTTP over OpenReach or will it only be via CityFibre?
I’m not in a Cityfibre area, but have Openreach FTTP. I ran the Vodafone availability checker on my property, and it showed FTTP available. The very next day, I received through the post an offer to get connected to “Vodafone Superfast 100” at 100Mbps, for £26/month.
It could be that they don’t have exchange cross-connects everywhere, so won’t sell FTTP in all areas.
Yes, that’s exactly it. They do try to send customers onto the ex-C&W network too for backhaul, where possible and I think they’ve been a bit slow making it all work in some areas.
Vodafone were touted as teaming up with Openreach to build six or so years ago. Deal fell through and VF went with Cityfibre. I don’t get the feeling that the Cityfibre deal has been that fruitful for VF.
Both Vodafone and Openreach will be around when the bubble bursts. As will Virgin/o2. Which may well be on their mind.
Meh , they cant even keep up with openreachs FTTP rollout as is and just offer weird deals on more expensive Pro packages with minor benefits, I’d prefer they spend the money on sorting there own service out first
Come on BT merge is best