Industry Trend Analysis - IoT Key To Realising Vodafone's Fibre Ambitions - JAN 2018


BMI View : The FTTP partnership with CityFibre poses limited upsides for Vodafone, assuming the latter focus es on mass-market converged servi ces . Coming late to the market, Vodafone would struggle to make multi-play work for it in the UK. Howev er, a focus on consumer IoT would provide a more sustainable business in the long term, albeit one with relatively low revenue-generating opportunities in the medium term .

Vodafone has secured the rights to market consumer broadband services on the fibre-to-the-premises (FTTP) networks being built by wholesale fibre network operator, CityFibre. 20% of the addressable broadband market will be covered by 2025, representing a much faster route to market for Vodafone than acquiring capacity piecemeal on incumbent BT Openreach's network. However, Vodafone needs to do more than merely secure access to potential customers and its late-mover status in multi-play services poses considerable downside risks if it were to focus exclusively on that opportunity.

This is not Vodafone's first foray into the UK's wireline broadband services market. It previously bought spare capacity on the Openreach network to serve customers under its own brand, but was frustrated by the slow pace of Openreach's infrastructure roll out and high access and interconnection costs and struggled to attract customers. The CityFibre partnership will yield superior connectivity at a lower cost and under more attractive service conditions, enabling Vodafone to more aggressively its nascent multi-play service portfolio.

Vodafone Has Its Work Cut Out
UK Broadband Subscription Forecasts
f = BMI forecast. Source: BMI, Ofcom

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