Vodafone scores points over cablecos as convergence intensifies

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The third quarter of 2017 produced a mixed bag of fortunes for broadband operators, with cable majors such as Liberty Global posting poor results, with a 30% net income dive and video subscriber losses. But where some fall, others rise. At present, the ball is in the telco park, and Vodafone was the stand-out performer in Europe in the last quarter, posting a significant uplift in broadband subscribers and a small video customer boost in its first half 2017 filing.

Vodafone no longer a mobile-first operator:

Vodafone’s impressive rise to 17.1m broadband customers across Europe, from 12.9m this time last year, builds on the strong mobile and telecoms insurgence into cablecos’ core markets, which has been a long time coming, especially as MNOs tap into wired infrastructure for cellular backhaul. Granted, much of Vodafone’s broadband growth has been acquired, as it snapped up local cable operators in Germany and Spain and ISP lines in Italy, not to mention the Ziggo merger, but Vodafone has also put its money where its mouth is by pledging significant sums to broadband development projects.

The telco made positive progress in its attempts to make headway in the UK broadband market last week, where it has previously struggled to slide projects past regulators, with the announcement of a new £700m ($921m) project with network infrastructure provider CityFibre. It aims to connect one million homes in 12 UK cities by 2021, followed by an ad-ditional five million should the project prove a success – mounting pressure on BT and Virgin Media.

In the UK, Vodafone has just 254,000 subscribers to broadband services, on copper lines which it rents from BT’s Openreach subsidiary, and its healthy performance was also boosted by a £100m ($131.6m) compensation payment from BT for installation delays. A collaborative investment between Vodafone and Openreach could be on the cards, accord-ing to Vodafone CEO Vittorio Colao, on the condition that Openreach matches CityFibre’s wholesale prices.

In the first half of this year, Vodafone saw the most broadband net additions in Europe with 1.2m in the six-month period, leading Orange, which saw net adds of 800,000, fol-lowed by Liberty Global with 700,000, Deutsche Telekom with 500,000, and BT with 100,000, while Telefonica actually lost 100,000 broadband subscribers

The last quarter accounted for 628,000 of Vodafone’s broadband adds, topped by Germa-ny, where fixed broadband users climbed 94,000 to total 2.3m; Italy saw 54,000 net adds to also reach 2.3m; and Spain added 42,000 to hit 2.5m – helping Vodafone to hit 15.4m broadband subscribers, or 18.6m including VodafoneZiggo.

Mixed first half results, between services and geographies:

Overall, Vodafone posted first half profit of £1.1bn ($1.4bn), compared to a £4.5bn ($5.9bn) loss in the same period last year, and adjusted its full year earnings projection to between £13.1bn ($17.3bn) and £13.33bn ($17.5bn), a hike of between 4% and 8%. How-ever, group revenue dipped 4.1% to £20.58bn ($27bn).

Vodafone video subscribers increased by 60,000 in the last quarter to total 9.68m in Eu-rope, with Spain performing most strongly with 47,000 adds in the period. In the key German market, Vodafone holds 7.7m video customers but lost 24,000 in the last quarter, while Unitymedia has 6.4m and DT has picked up 2.7m IPTV customers in Germany (since 2007), though its growth has slowed. Sky Deutschland recently passed the five million milestone.

Performance in the fiery Indian market, where Vodafone is merging with Idea Cellular – it suffered a net loss of €79m ($93.6m) in the first half of 2017, on service revenue of €2.6bn ($3bn). The merger is on track, according to Vodafone, receiving approval from SEBI (Securities and Exchange Board of India) and CCI (Competition Commission of In-dia), but awaiting clearance from DoT (Department of Telecommunications) and NCLT (National Company Law Tribunal).

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Caroline has been analyzing and reporting in the hi-tech industries since 1986 and has a huge wealth of experience of technology trends and how they impact on business models. She started her career as a journalist, specializing in enterprise and carrier networks and in silicon technologies. She spent much of her journalistic career at VNU Business Publishing, then Europe’s largest producer of technology publications and information services . She was publishing director for the launch of VNU’s pan-European online content services, and then European editorial director. She then made the move from publishing into technology market analysis and consulting, and in 2002 co-founded Rethink Technology Research with Peter White. Rethink specializes in trends and business models for wireless, converged and quad play operators round the world and the technologies that support them. Caroline’s role is to head up the wireless side of the business, leading the creation of research, newsletters and consulting services focused on mobile platforms and operator models. In this role, she has become a highly recognized authority on 4G systems such as LTE and WiMAX, and a prolific speaker at industry events. Consulting and research clients come from major mobile operators, the wireless supply chain and financial institutions.

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