Vodafone makes long-awaited move into consumer broadband as it bids to attract more customers
Vodafone is to launch a residential broadband service in the UK in a bid to keep up with TalkTalk, Sky and Virgin Media, all of whom offer a variety of different communications services to customers.
The company will use the infrastructure acquired in the acquisition of Cable and Wireless (CWW) in 2012, currently used to provide services to enterprises, to power the network, which will launch in Spring 2015.
The Newbury-based operator will hope that the addition of fixed line services will boost revenues and increase customer retention as the UK’s major telecommunications firms increasingly offer ‘triple-play’ and ‘quad-play’ packages of TV, broadband, landline and mobile services.
TalkTalk, BT and EE all offer television services to customers, while Sky offers broadband alongside its core TV packages and Virgin Media has been able to provide ‘quad-play’ bundles for some time.
Vodafone fixed expansion
Vodafone is building fibre networks in Italy, Spain, Portugal, the Netherlands and Ireland and has acquired Spanish cable provider Ono and Kabel Deutschland in Germany in a bid to expand its fixed infrastructure. The company has 11.2 million broadband customers in all markets, 10.5 million in Europe, and it reaches 42 homes across the continent.
Fixed revenues account for 23.7 percent of its European income, helping to offset falling mobile revenues caused by a competitive market, regulatory environment and challenging economic conditions.
Service revenues fell in Germany, Italy, Spain and the UK during the first half of 2014, but this was still an improvement and Vodafone is confident its £19 billion ‘Project Spring’ investment programme will eventually return the company to positive mobile growth. Overall, first half revenue was up 8.9 percent to £20.8 billion but profits slumped by 58.2 percent to £917 million.
“We have made encouraging progress during the quarter,” said Vodafone CEO Vittorio Colao. “There is growing evidence of stabilisation in a number of our European markets, supported by improvements in our commercial execution and very strong demand for data.”
Vodafone says its 4G service now covers 59 percent of Europe and it now has 10.5 million LTE customers, including 1.4 million in the UK. It is confident that improved coverage as well as innovations like HD Voice and Voice over LTE (VoLTE) will encourage users to take out 4G contracts and to consume more data, claiming that data traffic is up 77 percent year-on-year.
“Our two year, £19 billion investment programme is well underway, and customers are beginning to see the benefits: in wider 3G and 4G data coverage, improved voice quality and reliability, and increased access to next generation fixed line services,” added Colao. “Customers are showing an increasing propensity to trade up to bigger data allowances as a result of the 4G experience.
“Today in Europe, only 6 percent of our customers are using 4G. In the next 18 months, we will reach 90 percent 4G coverage in Europe, giving us a great opportunity to increase penetration, stimulate data usage and grow customer spend.”
Elsewhere, Vodafone Global Enterprise reported a 1 percent rise in revenue thanks to major contract wins including Aviva, British Gas and Robert Bosch. Colao says investments in M2M and unified communications will boost this in the future, adding that 24 percent of enterprise revenue is now from fixed line services.
“Our unified communications strategy continues to advance, with accelerating customer growth, further progress on fibre deployment, and the ongoing integration of recent acquisitions,” the CEO claimed.