Vodafone and Altice join forces in Germany, seeking broadband win

The fiber-to-the-home connections will branch out within and beside current hybrid fiber cable networks.

Vodafone Group and Altice joined forces to provide fiber-to-the-home to up to seven million homes in Germany, the companies announced this week.

The new connections will be deployed over a six-year period in a €7 billion ($6.8 billion) project. It is an expansion of Vodafone’s large existing 1Gbps broadband presence in Germany. The companies expect joint venture FibreCo to be up and running by the first half of 2023.

“This significant infrastructure investment supports the country’s social, economic and digital development and the broadband ambitions of the German government as part of Europe’s Digital Decade targets,” said Vodafone’s Nick Read, group chief executive, in a press release.

“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,” said David Drahi, co-CEO of Altice.

In terms of finances, Vodafone will receive cash proceeds of up to €1.2 billion from Altice. This payment will be split up into an upfront payment of €120 million at closing, deferred payments of up to €487 million throughout the rollout process and an earn-out of up to €595 million based on the joint venture’s performance. About 70% of the €7 billion FibreCo investment throughout the roll-out period is expected to be financed by debt.

What’s in the tech?

The joint venture called FibreCo will be owned 50% by Vodafone Germany and 50% by Altice. Specifically, Altice subsidiary Geodesia will take charge of most of the roll-out construction and maintenance.

“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 U.S., together with Vodafone’s competitive position as anchor tenant will help us establish one of the largest FTTH ventures in Europe,” Drahi said.

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This further enables Vodafone’s existing upgrade plans for next-generation broadband in Germany, which include bringing fiber closer to all connected homes through node splitting and DOCSIS 3.1 high split for download speeds of over 3Gbps.

Node splitting allows for each user to access more of the cable capacity feeding into their service areas. Other techniques are becoming more common to handle large amounts of pipe for a consumer home, such as virtualizing converged cable access platform functionality, moving some head-end functionality to optical nodes much farther back in the network, or using small-diameter neoprene and network function virtualization in service of a software-only model.

Standards body CableLabs says a high split extends the spectrum range of both upstream and downstream traffic.

“Dedicating higher band splits to upstream traffic will future-proof our networks for years to come,” CableLabs wrote.

Vodafone is also keeping an eye on DOCSIS 4.0 for its application in bringing higher speeds to the hybrid fiber cable network. DOCSIS 4.0, released in March 2020, can increase the upstream capacity of hybrid fiber-coaxial networks to 6Gbps, an increase of almost four times. It has been built in anticipation of more commercial devices putting weight on the upstream cables as more and more customers use virtual reality or advanced video conferencing tools. In the long-term, DOCSIS 4.0 has the goal of reaching 10Gbps.

Wholesale access to the FibreCo network will be open to all telecommunications providers in Germany. Most of the roll-out (80%) will take place over large housing associations which already use Vodafone’s hybrid fiber cable network, while an additional 20% will be placed in homes adjoining existing infrastructure.

Vodafone brings its expertise in large-scale commercial deployments and commercial homes, while the FibreCo project will also benefit from Altice’s FTTH roll-out experience and wholesale knowledge.

Rivalries and investors

Germany is Vodafone’s largest market. This partnership allows them to present a serious challenge to German rival Deutsche Telekom in the push for next-generation broadband.

Vodafone’s feet are also being held to the fire a bit internally, as investors push Read to improve returns across the range of the pan-European mobile and broadband provider. Vodafone is also feeling the heat in Spain after it missed out on a deal to the benefit of rivals Orange and MasMovil, which may pursue a strategic merger to scoop up more market share in the area.

In early October, Vodafone announced the proposal of a merger with Three UK, which would combine the third and fourth-largest mobile network providers in the country. The companies frame the potential handshake as a win for 5G services and broadband availability. They plan to finalize the deal by the end of 2022.

However, some analysts suggest it might be difficult to get regulatory approval for such a merger at a time when lack of competition is seen as a poor choice during a time of cost-of-living challenges for customers.

For more cable and broadband news, see Google’s ongoing effort to be the foremost fiber provider in the U.S. and a large new private 5G network.