Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.
February 5, 2020
Vodafone is in discussions with Germany's Deutsche Telekom about sharing networks in so-called "grey spots," where only one mobile service is currently available.
Any deal could help Germany to realize some ambitious 5G targets set by the national regulatory authority, which wants to see a 100Mbit/s service provided to 98% of households by December 2022.
In November, Vodafone, Deutsche Telekom and Telefónica Deutschland each agreed to build another 2,000 mobile sites in "white spots" that today lack any mobile service whatsoever. The new sites will be shared with rivals.
Vodafone and Deutsche Telekom could now build on that deal with a new agreement to share "active" network equipment -- meaning the basestations and other electronics used at mobile sites.
Talks were confirmed earlier today by Vodafone CEO Nick Read as the operator published its trading update for the December-ending quarter.
Germany's mobile operators have been looking at ways of reducing rollout costs and accelerating 5G deployment after they collectively spent around €6.5 billion ($7.2 billion) -- far more than analysts had expected -- on the acquisition of new frequency licenses last year.
Vodafone held those license fees partly to blame for last year's increase in net debt, which soared from €27 billion ($29.7 billion) to €48.1 billion ($52.9 billion) between March and September after Vodafone also bought cable assets previously owned by Liberty Global.
Network-sharing efforts are largely focused on rural parts of Germany because of what Read described as "several challenges" in more densely populated communities.
In these areas, a significant percentage of Germany's mobile infrastructure is installed on the rooftops of buildings, which face tougher EMF (electro-magnetic field) restrictions due to public concern that mobile-phone signals may be harmful to health.
During a call with analysts this morning, Read explained that rooftop leases are also typically negotiated on a per-operator rather than a per-site basis. "It is more challenging for a new entrant to gain access to city sites or get discounted terms," he said.
In its accompanying presentation, Vodafone said German operators are usually not allowed to sub-lease rooftop sites to additional tenants.
The update on network sharing came as Vodafone hailed good progress on its creation of a separate towers business that will manage about 60,000 sites across Vodafone's European footprint.
Having named its management team in November, Vodafone has now chosen Dusseldorf as the headquarters for new towers business and reckons it will be operational by May this year.
The operator is now preparing for a possible initial public offering in early 2021 and says it is also looking at the "monetization" of individual markets in parallel.
Read declined to rule out the sale of a majority stake at the national level but told analysts that he would prefer to retain control or set up joint ventures. The European holding company is set to remain under Vodafone's control, said the company when it first announced the towerco plans.
The scheme is designed to boost the valuation of infrastructure assets, which Read believes are currently undervalued as part of the Vodafone Group.
Vodafone's discussions point to an enterprise value of at least 20 times earnings (before interest, tax, depreciation and amortization), Read told analysts back in July -- a multiple that implies the holding company will be worth around €18 billion ($19.8 billion), based on Vodafone's estimates.
— Iain Morris, International Editor, Light Reading
Read more about:Europe
International Editor, Light Reading
Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).
You May Also Like
Rethinking AIOPs — It's All About the DataMar 12, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Fiddling with Fixed WirelessMar 21, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Cable and 5G: The Odd Couple?Apr 18, 2024
SCTE® LiveLearning for Professionals Webinar™ Series: Delivering the DAA DifferenceMay 16, 2024