Telco to work with partners to extend Gigabit broadband to businesses, rural consumers over four years; will also accelerate DOCSIS 3.1 rollout

Vodafone on Monday unveiled a plan to invest €2 billion in the roll out of high-speed broadband connections in Germany over four years, primarily targeting business customers.

The telco said the scheme will deliver 13.7 million Gigabit broadband connections and upped its guidance for service revenue growth and EBITDA margin for the period.

Vodafone does not intend to work alone on what it calls its Gigabit Investment Plan.

It has allocated the lion’s share of the spend to Giga-Business element of the project, which builds on an existing relationship with fibre-to-the-premises (FTTP) network provider Deutsche Glasfaser; two months ago, the pair agreed to work together to cover 19 business parks by early next year.

Under the new plan Vodafone aims to reach 100,000 companies in 2,000 business parks by the end of 2021, accounting for €1.4 billion-€1.6 billion of its spend. However, Vodafone said it needs a 40% take-up rate among businesses in an individual park before it can proceed with the investment.

It will work with a number of partners, including Deutsche Glasfaser and others with "specialist fibre skills or relevant infrastructure assets" via various strategic agreements.

In most cases, the partner will deploy the passive infrastructure while Vodafone operates the network and provides services, although Vodafone will take full ownership of the passive infrastructure over the long term.

The remaining investment will be split between the Giga-Municipality and Giga-Cable segments of the project.

Under the former, Vodafone plans to roll out gigabit broadband to 1 million consumer households in rural areas in partnership with local municipalities by end-2021. The municipality will build and own the passive infrastructure from the central office to the home, potentially backed by government subsidies, while Vodafone will deploy the active equipment and connect the homes. The telco will spend €200 million-€400 million, but again requires one-third of homes in a municipality to sign up for fibre broadband before it will start work.

The cable part of the scheme will see Vodafone spend around €200 million to increase the speed of its cable broadband network to 1 Gbps from 500 Mbps at present by accelerating the rollout of DOCSIS 3.1 over two years, compared with its previous four-year plan.

"The project is consistent with our strategic goal to become a leading converged communications operator in Germany, enabled by a best-in-class Gigabit network infrastructure," said Hannes Ametsreiter, CEO of Vodafone Germany.

"I am confident that these largely success-based investments will deliver incremental revenue growth and attractive returns for Vodafone’s shareholders," Ametsreiter said.

The telco said it expects the plan to boost service revenue growth in Germany by one to two percentage points compared with previous expectations, starting in full-year 2019-20 and bring about "materially higher" EBITDA margins than the 34.1% it recorded in 2016-17.

For more discussion on ultra-fast broadband rollout in Germany and in neighbouring markets, attend Total Telecom’s Connected Europe event in Lisbon, 11-12 October.