Sponsored By

Vodafone and Altice start digging in Germany, regardless of demand

OXG Glasfaser, the fibre altnet joint venture between Vodafone and Altice, has broken ground in Germany and is sticking by its target of reaching 7 million premises in six years.

Mary Lennighan

September 13, 2023

3 Min Read
fibre broadband
Internet connection with the optical fiber. Concept of fast internet

OXG Glasfaser, the fibre altnet joint venture between Vodafone and Altice, has broken ground in Germany and is sticking by its target of reaching 7 million premises in six years.

Interestingly, it noted that it will push on with the build without paying heed to demand. Or as Stefan Rüter, member of the management team at OXG Glasfaser, put it in a German language statement this week: “We are implementing our expansion without pre-marketing and without a completion quota to be achieved in advance. This creates security – for cities, for municipalities and for all residents.”

That might seem a bit rash, but it’s worth remembering that while the company is digging in new locations, this is not exactly entirely new ground for Vodafone. 80% of the network OXG aims to build will fall within Vodafone’s existing HFC footprint, so it presumably has a decent idea of what the upgrade rate is likely to be. The final 20% will focus on neighbouring homes.

Doubtless a number of those neighbouring homes will be new builds. “When expanding, our focus is particularly on the housing industry,” Rüter added.

The beginning of the build, in Neuss, a city on the west bank of the Rhine, close to Düsseldorf, marks the formal start of operations for OXG. It aims to roll out fibre-to-the-home (FTTH) to 28,000 homes in Neuss, with a view to moving across the Rhine to start work in Düsseldorf, Marburg, Duisburg and Kassel in the coming weeks. It’s medium-term aim is to start digging in “up to” 150 more cities by the end of next year.

While it reiterated its 7 million homes coverage target for FTTH, again with the ‘up to’ caveat, the company made no mention of the €7 billion it previously disclosed it expects to spend on the build. It’s pretty safe to say to say that projected costs are unlikely to have come down in the months since it shared its rollout plans though.

Vodafone and Altice first announced their plans to team up on FTTH rollout in Germany last October, got the go-ahead from the EU in February, and Vodafone completed the sale of half of its existing German fibre venture to Altice in March, creating the JV that is now known as OXG. As an aside, OXG stands for Open Access Glasfaser, or Open Access Fibre – more on that in a moment.

All in all, the pair have moved fairly quickly at a time when the climate for investment in fibre looks less favourable than it once did.

The start of 2023 saw Liberty Global-backed helloFiber pull back from its plan to roll out fibre infrastructure in Germany and file for bankruptcy protection just four months after it broke ground, having come up against the rising cost of capital and a shortage of construction capacity, amongst other things. Glasfaser Direkt also filed to open insolvency proceedings earlier this year after its major investor, KKR-owned John Laing group, chose to stop investment in German fibre. It later brought in a new backer in the form of CarMa Group, but some questions still remain over the broader investment climate.

Vodafone announced in March that it had secured debt facilities of up to €4.6 billion with a group of leading financial institutions to support network rollout.

From an operational point of view, it’s all about Vodafone; as far as we know, Altice is not setting itself up as a rival retail player in Germany. Vodafone will serve as the anchor tenant on the network, which will be open to other providers, but maybe not immediately.

In a statement, Vodafone said it will take over marketing and pricing of the new network “initially,” noting that “later, products can also be booked via other Internet providers.” So while this is an open access network, that wording suggests that Vodafone is buying itself a little period of exclusivity. It will be interesting to see how that pans out.

 

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

Get the latest news straight to your inbox.
Register for the Telecoms.com newsletter here.

You May Also Like