Broadband News

Vodafone added 20,000 fixed line broadband customers in last quarter

Vodafone in the UK has taken an aggressive position on pricing both for its VDSL partial fibre services and Gigafast products but given the price competition and engaged nature of a good many broadband customers the cracking the UK broadband market and gaining the first million customers is not proving easy.

In Q3 2019/2020 Vodafone had net additions of 20,000 customers, giving a total customer base of 687,000 fixed line customers, no news on the split between ADSL2+,partial fibre and full fibre but we will provide estimates later.

The results carry an indication of what some other European countries are doing with regards to rural mobile coverage.

In November, we signed a letter of intent in Germany with Deutsche Telekom and Telefonica Deutschland to co-ordinate the set-up and operation of up to 6,000 new sites in rural areas. This cooperation will allow the mobile industry to largely eliminate 'white spots' - areas with no mobile coverage by any operator - in sparsely populated regions and along traffic routes, in an economically viable way.

Additionally, we are in detailed discussions with Deutsche Telekom about a reciprocal active network sharing agreement for 'grey spots' - areas in which only one operator currently has coverage.

In February, we announced a Letter of Intent with NOS in Portugal to explore a potential nationwide partnership for mobile network sharing. We have started a period of exclusive negotiations and expect the agreement to be concluded by the end of June.

Extract from Vodafone Q3 19/20 results

That other countries in Europe have problems with mobile signals may surprise some, since a common retort is that mobile coverage is perfect whenever anyone from the UK crosses the narrow strip of water. The question in the UK is how will the war of words around the Shared Rural Network (SRN) progress in the UK, as things stand today initial costs have been shared by BT/EE but not everyone is happy with those. For those that don't know the Shared Rural Network is an initiative to improve mobile coverage backed with £500 million of public money and matched by the same amount from industry. The negotiations probably don't have long to run as given that infrastructure investment is something the Conservative Government are keen to be seen doing if negotiations are not going anywhere by the time of the next Budget in March what ever the Government considers sensible may be forced on operators.

Based on what we see from public speed tests our estimate of the split between the current product line up for fixed line services at Vodafone is:

  • 2.9% or 13,000 to 20,000 customers live on the full fibre Vodafone Gigafast service
  • 54.4% or 374,000 using the partial fibre Vodafone Superfast 1 product (VDSL2 40/10)
  • 33.5% or 230,000 using the partial fibre Vodafone Superfast 2 product (VDSL2 80/20)
  • 8.7% or 60,000 on the legacy ADSL2+ service they no longer sell

Given the Gigafast footprint that we know about is 161,042 premises this suggests a take-up rate of 8.1% to 12.4%. These are estimates and given the fairly small footprint the confidence levels are not that high, but given the lack of firm figures in the financial results we can only work with the data to hand.

In January 2020 we restructured our agreement with CityFibre to encourage a faster pace of build and a wider network reach, whilst retaining exclusivity for the first 12 months on a rolling basis. Following CityFibre’s acquisition of FibreNation, we now have the ability to extend these terms across CityFibre’s intended build footprint of 8 million UK homes. This builds on our agreement with Openreach in the UK, which we announced in November, to offer fibre-to-the-home service to 500,000 homes in three cities.

Vodafone on full fibre in Q3 19/20 results

What we don't know yet is how competitive the pricing of the Vodafone full fibre services will in the Openreach areas, i.e. how close to the existing Gigafast pricing will they be. If Vodafone carries across its aggressive partial fibre pricing we might see them being the first 160 Mbps Openreach FTTP product a penny or two under £30/m for new customers.

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