Vodafone, Orange strike €1B deal on Spanish fibre network

Vodafone and France Telecom's Orange will invest up to €1 billion to jointly build a fibre network in Spain that will bring high-speed Internet service to six million households across 50 major cities by September 2017.

Vodafone and Orange are partnering on a fibre optic network in Spain.

The two operators said that while the fibre networks will be owned independently, the companies will share the same technical specifications to ensure compatibility as a single network, and each partner will have guaranteed access to the whole infrastructure.

The joint deployment, which aims to compete with Telefónica's existing fibre network that presently reaches 2.2 million homes, is planned to connect 800,000 households and workplaces by March 2014, rising to three million by September 2015.

"The fibre optic market in Spain is very deficient in terms of competition and could end up ... a monopolised market if this is not corrected," Orange Spain CEO Jean-Marc Vignolles told Reuters at a news conference in Madrid.

The announcement of this deal could relieve pressure on Vodafone to acquire fixed-line assets to enable it to compete with Telefónica's bundled offerings, which have proved successful in Spain. 

"It negates the requirement to buy [Spanish cable operator] Ono and they [Vodafone] could do a similar deal in Germany, which may negate the requirement to buy Kabel Deutschland," Espirito Santo analyst Nick Brown told Reuters.

The network will be open to third-party participation, although commercial offerings from both firms will be completely separate, Vodafone Spain CEO Antonio Coimbra told Reuters.

While Vodafone and Orange confirmed they will still compete using fibre, they said an agreement needed to be reached with Telefónica on the vertical integration of the network 00the final section that is costly to complete.

Orange added that if Telefónica did not wish to cooperate, the two operators would take the matter of prices and access conditions to the Spanish telecoms regulator.

For more:
- see this release
- see this Sharecast article
- see this Reuters article

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