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Euronews: French Rivals Do Deal on FTTH

Orange (NYSE: FTE), SFR and Cable & Wireless Worldwide plc (London: CW) lead the way in today's charge through the EMEA telecom headlines.

  • France Telecom and rival broadband provider SFR have formed an agreement on fiber deployment in rural areas of France, which sees the pair dividing up the fiber spoils in the areas where both operators have redundant deployment projects. Of the 9.8 million households that fall into this category, France Telecom will serve 7.5 million and SFR will serve the remainder. (See FT/Orange, SFR Team on FTTH, Vodafone Sells SFR Stake for $11B and France Telecom Updates on LTE, FTTH.)

  • U.K.-based Cable & Wireless Worldwide is experiencing what airline pilots would call a spot of turbulence: Its half-year financials reveal EBITDA (earnings before interest, tax, depreciation and amortization) down 11.2 percent year-on-year at £190 million (US$301 million) and, in what is probably not an entirely unrelated move, it is replacing John Pluthero with Gavin Darby as CEO. Darby has been most recently responsible for Vodafone Group plc (NYSE: VOD)'s operations in the U.S., Africa, India and China. Pluthero only took over as CEO of C&WW in June. (See C&WW Provides H1 Update, C&W Worldwide Names New CEO and Pluthero Back in C&W Hot Seat.)

  • BT Group plc (NYSE: BT; London: BTA) is playing catch-up with Virgin Media Inc. (Nasdaq: VMED) by launching a 100Mbit/s fiber-to-the-home (FTTH) broadband service, Infinity Option 3. Initially, the service will only be available in nine exchange areas, most of them in London. BT says it now has more than 300,000 customers signed up for its existing fiber-based broadband offerings. (See BT Launches 100Mbit/s FTTH Service, Euronews: BT Speeds Up FTTX Rollout and BT Ramps Up Its FTTX Speeds.)

  • French broadband provider Iliad (Euronext: ILD) increased revenues by 5 percent in its third quarter, adding 93,000 subscribers (net) in the process and giving it a 34 percent market share of all new broadband subscribers in the period. (See Iliad Reports 5% Growth in Q3 and Iliad Reports H1.)

  • TalkTalk , the much-complained-about U.K. broadband provider, is apparently still suffering from its poor customer-service reputation, as its half-year financials show it shedding 43,000 subscribers in the second quarter. Revenue for the first six months was down 4.8 percent year-on-year, though it still managed to report a 38.2 percent rise in profits after tax. (See TalkTalk Revenues Down in H1 and Ofcom Reveals UK's Least Favorite Telcos.)

    — Paul Rainford, Assistant Editor, Europe, Light Reading

  • skyrocketsupply 12/5/2012 | 4:46:17 PM
    re: Euronews: French Rivals Do Deal on FTTH

    Why are these telecom companies not making more money?  FTTH costs have been driven down dramatically, especially if you find the right equipment and component suppliers.  Passives like filters and fiber optic splitters are very mature and low cost.


    Kirk


    www.skyrocketsupply.com


     

    paolo.franzoi 12/5/2012 | 4:46:16 PM
    re: Euronews: French Rivals Do Deal on FTTH

    The thing is that carriers ARE profitable.  The question is "How long to profitability?"  Assuming they get subs and sell the service for more than it costs them to operate, they get ROI.


    Here is the thing:  They have lots of choices to spend money on.  They are getting better ROI from investments in Wireless and Business Services.  The reason that companies tend to invest in FTTH is either they have competition (Verizon and NTT) or have government support (Korea).


    seven

    Duh! 12/5/2012 | 4:46:15 PM
    re: Euronews: French Rivals Do Deal on FTTH

    What Seven said.


    But more to the point, most of the CAPEX in an FTTP buildout is in fiber construction, not in the cost of passives.

    paolo.franzoi 12/5/2012 | 4:46:12 PM
    re: Euronews: French Rivals Do Deal on FTTH

    Skyrocket...see labor unions.


    Basically, how do you cut the cost of digging up streets?  There is not a lot of technology gain.  So, it is all about lowering labor costs.  So, the carriers beat on the only people who they can...the various equipment vendors.


    seven


     

    skyrocketsupply 12/5/2012 | 4:46:12 PM
    re: Euronews: French Rivals Do Deal on FTTH

    If the cost of FTTH passives is negligible, why is pricing driven down by the customers so aggressively?  Seems like it would be smarter to beat on the construction services.


    Kirk


    www.skyrocketsupply.com


     

    paolo.franzoi 12/5/2012 | 4:46:11 PM
    re: Euronews: French Rivals Do Deal on FTTH

    Duh!,


    I am not bashing.  BUT...you can say what you want the labor costs are fixed for Telcos because of the Unions.  He asked why not beat up on construction and that is why.


    seven


     

    Duh! 12/5/2012 | 4:46:11 PM
    re: Euronews: French Rivals Do Deal on FTTH

    I'm not with you on union bashing.  True, the IBEW folks get good wages, and not necessarily for hard work (except during disaster recovery).  But even for MSOs who use non-union contractors, cost of construction dominates, only to a slightly lesser degree.


    There have been some technology gains: overlashing robots, directional boring, GIS.  Just not enough to seriously bend the curve.    If I were running the venture operation at a Telco or MSO, I'd be looking for innovations in OSP construction.


    But in the current business climate, the Telcos have to squeeze every penny they can, and equipment and passives vendors are the low hanging fruit.

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