Vodafone Group is having preliminary discussions with BT Group over a potential UK partnership to develop full-fibre broadband, according to a person familiar with the matter, as it considers options to expand its fixed network at home outside of a long-mooted tie-up with Liberty Global.
Vodafone, based in Newbury, England, and BT’s Openreach infrastructure division are in early, exploratory conversations about co-investing on fibre connections to homes and businesses in one or two cities, said the person, who asked not to be identified as the talks are private.
A regulatory commitment by the former phone monopoly to provide equal access to its wholesale network is seen as a hurdle for any deal, as Vodafone would want some kind of exclusivity with the co-investment, the person said. The Telegraph reported earlier on the talks. A partnership would help deliver on efforts to bring more full-fibre connections to the UK, which at about 2% coverage lags far behind countries like Spain and Portugal, where Vodafone has pursued co-investment. Openreach, used by carriers including Vodafone and Sky to deliver broadband, is under pressure from the government and regulators to replace more of its copper with fibre and is consulting with customers about a target to fully connect 10mn buildings by the mid-2020s.
For Vodafone, a deal would offer an alternative to merging or swapping assets with billionaire John Malone’s Europe-focused cable carrier Liberty Global. Vodafone lacks scale with its fixed business in the UK, which has limited its television ambitions in the country and may pose a challenge for its ability to carry the vast amounts of data that will enter mobile networks in years to come as fifth-generation wireless services take hold.
The Openreach fibre roll-out would add competition for Liberty’s Virgin Media, which is in the middle of its own cable expansion in the country. Vodafone and Openreach declined to comment on the talks.
In a statement, Openreach reiterated its openness to co-investment, a commitment made in March when BT and communications regulator Ofcom agreed to the legal separation of Openreach from the former phone monopoly.
“We’re currently consulting with all of our wholesale customers on the case for a large-scale full-fibre broadband network,” Openreach said in an e-mail. “As part of this we’re asking about their potential interest in different forms of commitment to new fibre-to-the-premises infrastructure, including co-investment.”