Monday, September 11, 2017

Vodafone DE's Gigabit Investment Plan

Vodafone DE launches Gigabit-Offensive, or Gigabit Investment Plan: EUR 1.8-2.2b in 4 yr (18/19 - 21/22), for 1/3 of all HH: 13.7m connections.

3 pillars
  • GigaKabel (Cable): 12.6m HH; EUR 200m (excl CPE); accelerates Docsis 3.1 deployment from 4 to 2 yr; target 0.5-1.0 Gb/s.
  • GigaGemeinde (Municipality): rural, 1m HH = 2m pops, FTTH; EUR 200-400m; requires 33% participation; muni to own passive and apply for subsidies; Vodafone active operator (incl CPE).
  • GigaGewerbe (Business): 100k FTTO in 2k parks; EUR 1.4-1.6b; with partners incl. Deutsche Glasfaser for passive; long-term full ownership of passive; requires 40% participation.
  • IRR minimum 20%
  • Pay-back: max 4 yr (FTTO), 6 yr (rural FTTH)
  • Contribution to SR growth: 1-2 pp from mid-term (FY 19/20)
  • EBITDA-margin above-average/materially higher (currently 34.1%)
  • CF impact limited due to coop approach (17/18 limited, then 100-200m EUR/yr)
  • Group capex/rev unchanged (mid-teens mid-term) excl Gigabit Investment Plan (disclosed separately)
  • Limited FTTH.
  • Smart way of reaping subsidies and sharing cost with partners.
  • Focus on (ultimately) vertically integrated model. Not a word about open access.
  • Attractive financials.
  • Deutsche Glasfaser takeover target eventually (others not clear).
  • Cost per connection/household
    • Docsis 3.1: EUR 15.87 (excl CPE)
    • Rural FTTH: EUR 300 ad mid-point for part of the investment
    • FTTO: EUR 15,000