The Spanish subsidiaries of European telecom giants,
Vodafone Group Plc.
) have expedited the launch of their joint FTTH (Fiber to the
Home) network in Spain. According to both the companies, the
commercial services of the FTTH network will be available before
the end of 2013 instead of the previous Mar 2014 schedule.
The joint implementation of the FTTH network has already begun
in 12 cities across Spain, including Madrid, Barcelona, Malaga,
Valencia and Seville. Additionally, both the companies share an
agreement with rival
) whereby they can connect their network with existing
infrastructure of the latter installed inside buildings.
Notably, in Mar 2013, U.K. based Vodafone and France-based
Orange entered into an agreement to deploy a FTTH network in 50
major cities across Spain with an investment of around $1.3
billion (€1 billion). Both parties intend to cover 800,000 houses
by Mar 2014. The combined effort plans to reach 3 million
premises by the end of 2015 and 6 million by Sep 2017.
Vodafone and Orange will continue to build and maintain its
own FTTH network in different parts of the country and will use
the same equipment that will allow both to access each other's
network. Each company will build complementary networks and will
try to restrict overlapping. The agreement is based on an open
accessed model and is thus open to other operators willing to
join this investment project.
Both the incumbent operators will handle the connection,
delivery and service management of their own respective networks
and thus will also charge different prices to their customers.
Recently, both the companies also agreed to share network
infrastructure in Romania.
Currently, FTTH network supports a very small part of Spain's
wireline connections and has been mainly dominated by Telefonica.
But the adaptation rate of this fibre based service is gradually
improving and we foresee the joint effort to not only expand the
coverage area across Spain but to also create a formidable
opponent to Telefonica.
Vodafone currently carries a Zacks Rank #3 (Hold) while Orange
carries a Zacks Rank #5 (Strong Sell). Another company within the
sector that is worth considering is
Turkcell Iletisim Hizmetleri AS
). The stock currently carries a Zacks Rank #2 (Buy).
ORANGE-ADR (ORAN): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis
TURKCELL IL-ADR (TKC): Free Stock Analysis
VODAFONE GP PLC (VOD): Free Stock Analysis
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