- Vodafone and Altice are forming a FTTH joint venture (JV) in Germany
- The JV will take fibre access lines to 7 million homes
- About 80% of those homes are already in Vodafone Germany’s footprint
- Vodafone will, in time, get €1.2bn from Altice as part of the JV deal
Vodafone is slicing and dicing (and even splicing!) its fixed broadband network assets in Germany by forming a fibre-to-the-home (FTTH) joint venture (JV) with Altice, the pan-European operator owned by billionaire businessman Patrick Drahi. The JV aims to invest €7bn over the next six years to build a wholesale network that will pass 7 million German homes with fibre broadband lines.
The 7 million households to be passed comprise 5.4 million homes in large housing associations that are already in Vodafone Germany’s cable broadband footprint but “are interested in FTTH upgrades,” according to the operator. The other 1.6 million households are in areas beyond, but adjacent to, Vodafone’s current footprint.
It’s worth noting that the fibre lines to be built in Vodafone’s existing footprint will not be replacing the existing cable broadband access network, but built to run alongside it, giving households the option of sticking with Vodafone’s DOCSIS-powered cable broadband service or switching to a FTTH service.
So Vodafone is bringing existing networked areas and its relationships with the housing associations to the JV, while Altice is bringing its “unique FTTH rollout, wholesale and operational expertise” to the party. A subsidiary of Altice, Geodesia, will be awarded the contract for most of the fibre access network rollout and maintenance.
Vodafone Germany will be the anchor tenant on the wholesale network, but other ISPs will also be able to use the FTTH network to market competitive service, ultimately giving the 5.4 million homes currently sporting a cable broadband connection the chance to switch to an alternative broadband service provider.
As part of the JV deal, Altice will pay up to €1.2bn to Vodafone, comprising €120m once the JV is formed (expected in the first half of 2023), up to €487m as the network is built out, and up to €595m in “earn-out” payments that will be dependent on the the JV’s financial performance.
“Altice’s existing presence in Germany through Geodesia, its unique track record in operating over 45 million homes with the latest very high-speed fibre networks across Europe and the US, together with Vodafone’s competitive position as anchor tenant, will help us establish one of the largest FTTH ventures in Europe,” stated David Drahi, co-CEO of Altice. “We have pioneered fibre joint ventures in France and Portugal, and are thus thrilled to be able to replicate such a feat in Germany with such a partner,” he added.
The move is an interesting one by Vodafone. It has stated on a number of occasions that it is happy to evolve its cable broadband network and has no plans to stop using DOCSIS technology and switch its entire fixed broadband network in Germany to fibre. Indeed, in today’s announcement about the JV with Altice it states: “This partnership with Altice is complementary to Vodafone’s clear upgrade plans for its existing hybrid fibre cable network. This includes bringing fibre connections closer to all connected homes through ‘node splitting’ and DOCSIS 3.1 ‘high split’, which enables download speeds of over 3Gbps. These upgrade plans, coupled with next generation-technology advances, such as DOCSIS 4.0, provide a path to 10Gbps speeds across our hybrid fibre cable network over time.”
It has also noted that any new fixed broadband network its builds will use FTTH technology rather than cable broadband technology, as is the case here with the 1.6 million households outside its existing footprint, but it’s clear that Vodafone also recognises that DOCSIS will not answer customers’ needs forever and that, in time, the “interest” in FTTH connectivity it is seeing from German housing associations will likely spread to other customer bases.
It’s interesting also that Vodafone is opening itself up to ISP competition in the 5.6 million homes covered by the new JV that are already in its cable broadband footprint. It clearly has a lot of faith in its brand, marketing capabilities and ability to keep churn to a minimum, as losing millions of homes to rivals on a shared fibre network, in which it owns a 50% stake, could be regarded as reckless.
- Ray Le Maistre, Editorial Director, TelecomTV
Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.