Vodafone Group has announced a long-term strategic partnership deal with UK-based alternative fibre broadband provider CityFibre. In a press release outlining the development, Vodafone confirmed that under the wholesale agreement between the pair it will have a period of exclusivity – ‘predominantly during the build phase of each city network’ – to market ultrafast consumer broadband services on the fibre-to-the-premises (FTTP) network which is to be built, operated and owned by CityFibre.
Construction of the first phase of deployment, covering one million premises, is due to start in the first half of 2018, and is expected to be ‘largely complete’ in 2021. It was noted that both parties have the right to extend the commercial terms of this agreement to expand coverage to a further four million homes and businesses by 2025. Marketing of FTTP services will reportedly commence from mid-2018, with the first customers likely to be connected towards the end of that year. Meanwhile, Vodafone confirmed it has made a minimum volume-based commitment for ten years which increases over the period to 20% of the initial one million premises. The first phase of the agreement encompassing one million premises is estimated by CityFibre to be worth over GBP500 million (USD657 million) over 20 years, ‘assuming that the ten-year 20% minimum volume commitment is maintained throughout the subsequent ten years’.
Vodafone has suggested that the agreement will provide its domestic subsidiary with ‘access to a superior product at a lower cost and with better service conditions than the regulated wholesale terms offered by the incumbent operator for access to its legacy copper telephone line broadband network’. Further, the telecoms giant has said the move is ‘consistent with [its] capital-smart fixed infrastructure strategy that aims for an optimal mix of build/strategic partnership/wholesale/buy approaches in fixed broadband’.