Industry Trend Analysis - Vodafone-NOS Deal Strengthens Positive Fibre Outlook - DEC 2017

BMI View: The fibre partnership between Vodafone and NOS will put further pressure on incumbent Altice's own plans to shut down its copper network by 2020. Portugal will continue to be one of the main outperformers when it comes to fibre penetration in Western Europe.

Vodafone and NOS have signed a fibre network-sharing agreement in Portugal. The deal will involve 2.6mn homes, with services available from early 2018. Vodafone will increase its fibre coverage to 4mn homes with the deal, while NOS will do so to 4.4mn homes, providing gigabit services across its entire footprint. The two companies will remain completely autonomous in terms of retail services. Positive regulation has made fibre the broadband technology of choice in the Portuguese market, and the two challengers want to make sure they can keep up, and potentially overtake, incumbent and market leader Altice, operating under the MEO brand.

In 2017, fibre became the main broadband technology in the Portuguese market. Positive regulation has helped demand, as the regulator mandated the incumbent to open the access to its ducts and poles, for challengers to roll out their own infrastructure, as opposed to unbundling. This has created strong competition between the three main players, especially in urban areas. In turn, this has led to competition on the convergence market, as each player has turned to multi-play to consolidate its customer base. Content has been a key driver of this move towards convergence, and there Vodafone and NOS have a prior relationship, through a reciprocal agreement allowing each company to show the other's sport content.

Fibre The Top Broadband Technology
Broadband Accesses By Technology (mn), 2015-2017
Source: Anacom

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