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Deutsche Telekom boss is wrong about 5G
Europe's biggest operator boasts success on both sides of the Atlantic, but there is scant evidence it is down to 5G.
Spanish incumbent reportedly hires banks to find partners that are willing to stump up between $4.7 billion and $5.9 billion to support ambitious fiber rollout plans at Virgin Media O2.
The tricky part of extensive full-fiber rollout plans – funding – was once again thrown into the UK spotlight.
According to El Confidencial, a Spanish news outlet, Telefónica has hired investment banks Barclays and LionTree to find a funding partner (or partners) to back full-fiber rollout by Virgin Media O2, its UK joint venture with Liberty Global.
Virgin Media O2 has an ambitious plan to upgrade its entire UK network to fiber-to-the-premises (FTTP) within the next seven years. More than half of Virgin Media O2's footprint, which comprises 15.5 million homes in total, is currently passed with DOCSIS 3.1 upgrades to HFC. FTTP passes some 1.2 million households.
Details were scant in the El Confidencial report, although unnamed sources indicated the cost or Virgin Media O2's full-fiber rollout ambition is between €4 billion (US$4.7 billion) and €5 billion ($5.9 billion).
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At first glance this seems high. Virgin Media O2 estimates FTTP rollout at about £100 ($140) per home passed. Over a seven-year period, an investment of £1.43 billion ($2 billion) – £100 multiplied by 14.3 million homes, which are currently passed by either DOCSIS 3.1 or plain-old HFC – works out to be just £200 million ($279 million) annually. This is roughly a fifth of what Virgin normally pumps into capital expenditure each year.
The full cost is likely to be significantly higher, however. Virgin admits that it has not specified the additional installation costs, performed as and when customers demand a service, in its public statement.
New financing models?
UK incumbent BT is on the prowl for full-fiber finance too. On presenting its latest of set of financial results, BT increased the target for its fiber-to-the-premises (FTTP) network from 20 million to 25 million premises by December 2026. It also opened the door to external investors for the first time by saying it will explore joint ventures to fund the additional 5 million premises.
"We're not excluding anybody, and we are very open minded," said BT CEO Philip Jansen.
In answer to a question during the analyst earnings call, he agreed that KPN's recent formation of a fiber infrastructure JV with Dutch pension fund APG represents a good example of how BT could proceed.
— Ken Wieland, contributing editor, special to Light Reading
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