In a move to improve quadplay offerings in Spain, France Telecom subsidiary Orange Spain and Vodafone’s local unit will jointly build a fibre optic network in the country at a cost of €1bn.
The announcement comes at a time when Vodafone has been…
In a move to improve quadplay offerings in Spain, France Telecom subsidiary Orange Spain and Vodafone’s local unit will jointly build a fibre optic network in the country at a cost of €1bn.
The announcement comes at a time when Vodafone has been repeatedly linked to acquisitions of cablecos in Europe. The company recently examined a bid for German Kabel Deutschland (KDG), but has also been rumoured to consider buying Spanish cableco Ono.
Orange and Vodafone said today they will deploy cable independently in different areas, but they will link up so they both have guaranteed access to the whole network.
The JV will also be open to other parties willing to co-invest.
The JV comes after talks with Telefonica about access to their incumbent network failed, Orange said in a statement: “Orange and Vodafone have been independently negotiating for months with Telefonica to share vertical infrastructures, with no positive results.”
Jean Marc Vignolles, CEO of Orange Spain, commented: “In order to fulfil in time the objectives of deployment we have agreed, it’s essential to reach an agreement with the incumbent operator relative to share vertical infrastructures but it hasn’t been possible so far. “
A Telefonica spokesperson refused to comment on the remarks.
Sam McHugh, an analyst at Bernstein Research, described the announcement as a strategic move: “It looks like more of a negotiating tactic from Orange and Vodafone to gain better wholesale access to Telefonica’s fibre, rather than a definitive intention to build,” he said.
But he added it was also interesting in terms of Vodafone’s strategy. “Its moves towards cable say a lot about Vodafone realising the world has moved on, and that users like getting four services together,” he said. By offering quadplay, operators could significantly reduce churn rates among their subscriber base.
Orange and Vodafone plan to connect up six million households and workplaces over the next four and a half years and to launch services at the start of next year.
Emeka Obiodu, an analyst at Ovum, thought a successful JV could have repercussions for operators across the continent. The model could be copied by other mobile operators across Europe seeking to upgrade their networks and reduce their reliance on access to incumbents’ last mile, he said.
“With former incumbents across Europe in prime position to effectively recreate a monopoly on fibre, this is a development to be watched”.
Orange and Vodafone already share 2G and 3G wireless networks in certain rural areas in Spain.
