Vodafone Germany’s stirring of the political next-generation network pot elicited an irritable response from key rival Deutsche Telekom.

Timotheus Höttges, Chief Executive (CEO) of Deutsche Telekom (DT), displayed contempt for Vodafone Germany’s (VfD) recently-announced “Gigabit Investment Plan” (Vodafonewatch, #158), describing it as a “joke” during the operator’s latest earnings conference call, covering the three months to 30 September 2017.

Höttges implied that the EUR2bn (£1.8bn) that VfD plans to spend through the programme (if partnerships are secured) was a meagre sum compared with DT’s heftier home-market capital expenditure (capex) levels. He also raised doubt over Vodafone’s ability to see the plan to fruition. “I really question the substance”, he said. Referring to German subsidiary Telekom Deutschland’s next-generation network (NGN) rollout plans, he added that “while others talk, we just do it.

Trolling mission accomplished

VfD may well be delighted to see such a heated and defensive response from Höttges and DT. The incumbent has in recent months been batting back renewed calls by politicians, during post-election coalition manoeuvring, for a sale of the state’s remaining minority stake in the operator to fund broadband expansion, as well as coming under further pressure to alter its own NGN strategy, beyond its predominant focus on copper-based vectoring upgrades (Vodafonewatch, passim).

Presented as a genuinely aggressive NGN play when announced in September 2017, the Gigabit Investment Plan‘s focus is on both DOCSIS 3.1 cable upgrades and fibre-to-the-premises coverage expansion.

However, the former element is not an altogether fresh or ‘expansionary’ move, as it was in the works anyway, and the latter part rests on firming up municipality and other partner relationships for investments to go ahead. As such, the plan could easily be read as an attempt by Vodafone to sow additional disharmony over the country’s broadband progress, and distract and disrupt DT.

The announcement could also be seen as a political move to lay the groundwork for M&A. The Plan was recently described as a “political” gambit by Mike Fries, CEO of oft-mooted Group merger target Liberty Global, owner of German cable player Unitymedia (Vodafonewatch, #159).

Höttges certainly had a point when noting the mismatch between VfD’s investment levels and those of DT, despite the Gigabit Investment Plan noise. Assuming (as-yet-uncompleted) “co-investment” agreements are firmed up, the programme envisages “incremental” spend of at least EUR2bn across the four coming calendar years, to 31 December 2021. This, therefore, positions the Gigabit Investment Plan as a near-30% add-on to VfD’s capex over that period, based on the EUR1.67bn spend it reported during its last full financial year (to 31 March 2017). Still, DT recently indicated it has allocated around EUR4.3bn per year to German capex, across the same period, and implied that the bulk of that outlay will be spent on fibre rollout.

Figure 1: Germany operator capex comparison, FY13-17

  • Telekom Deutschland still the king of capex

Sources: Vodafone, Deutsche Telekom, Telefónica, Vodafonewatch.

Image: Tom Roberts/Unsplash.

Table of Contents

EXECUTIVE BRIEF

Q2 FY17-18

Q2 FY17-18 management update: ready for Liberty?

Headlines — amputation and optimisation [p6]]

  • “Everything is changing?”
  • Table 1 Vodafone Group, revenue summary, Q2 FY17-18
  • Latest M&A moves mask struggles
  • Table 2 Vodafone Group, financial highlights, H1 FY17-18
  • On point on profit
  • Table 3 Vodafone guidance,  FY17-18

Outlook: on track towards minimalist forecasts [p9]]

Spend: CFO commands pushing others to background [p10]]

  • Wibergh’s Gigabit Vodafone now just a support act?
  • Table 4 Gigabit Vodafone, key tenets
  • Door left open for Gigabit Investment Plan replicas
  • Table 5 Digital Vodafone initiative, key tenets
  • Next steps — Digital Vodafone follows the money
  • Table 6 Vodafone Fit for Growth initiative, key tenets

GROUP

Deals

Vodafone confirms mulling New Zealand IPO ‘plan b’ [p15]]

  • Sky and beyond
  • AMAP reimagined

Maltese tie-up sunk by regulator [p16]]

  • Table 7 Malta, largest operator user comparison, 31 December 2016
  • Meaning in silence
  • Chickens, hatching
  • Wireline M&A hit rate takes another blow

Vodafone exits German M2M partner Device Insight [p18]

  • Vodafone out, KUKA in
  • DT sniffing around
  • VC activity moving out from centre
  • Table 8 People movement highlights
  • Table 9 Partner/supplier people movement highlights

Group Commercial

Vodafone firms up consumer IoT play [p24]

  • It’s a ten-year plan, folks
  • The ABC of ‘V’
  • Table 10 Pets, bags, cars, cameras: Vodafone’s move into consumer IoT

Carrier Services routing system meld now live [p27]

  • Fiefdom expansion
  • Dressed for divestment?

Group Technology

Wibergh, Colao turn 5G spotlight on cost efficiencies [p28]

  • Easy rider on data tsunami
  • 1800MHz to be re-farmed for 5G
  • 5G reality checks
  • No substitute for fibre
  • Beamforming banana skins
  • Connected car on the 5G move

Huawei joins Vodafone’s NFV vendor family [p34]

  • Vodafone keeps options Open

EUROPE REGION

  • Table 11 Vodafone Europe Region, service revenue summary, Q2 FY17-18

Q2 FY17-18

Group continues to hold European majors to cost control [p36]

  • Pacemaker Read keeps earnings rhythm
  • EU headwinds and headaches
  • A mixed picture

Germany

DT slams Gigabit Investment Plan as a “joke” [p39]

  • Trolling mission accomplished
  • Figure 1 Germany operator capex comparison, FY13-17

VfD flogs Munich-based cable interest to Tele Columbus [p41]

  • Not a big deal, but significant in context of VfD cost focus
  • Tidy-up likely not finished

Netcracker wins extended billing deal [p43]

  • Increased billing

VfD signals analogue cable TV switch-off in 2018 [p44]

  • Change in the air

Ireland

SIRO picks Huawei for first network phase [p45]

  • Progress so far; Sky joins retailer roster

Italy

VfIt and Huawei boast about 5G advances [p46]

  • MIMO momentum
  • MISE optimism

Netherlands — VodafoneZiggo

VodafoneZiggo hits suppliers with 5% price squeeze [p48]

  • B2B seems in need of a rethink
  • Tit-for-tat, but risks
  • Group’s central functions flag behind-the-scenes support
  • 2018 house move

Vodafone loses anti-competitive case with KPN [p50]

  • Knockback accentuated as spotlight turns on VodafoneZiggo power

UK

VfUK tests Openreach with CityFibre deal [p51]

  • Nuts and bolts of the tie-up
  • CityFibre builds backing
  • It’s an iterative strategy, says Colao
  • UK options left open regarding BT and Virgin
  • VfUK to follow up with fibre-based SME double-play
  • Table 12 Revised and pre-2015 900MHz/1800MHz licence fee rates

Licence refund an early Xmas present for operators [p55]

  • Court of Appeal requires Ofcom to re-think
  • Ruling unlikely to be the end of the matter

Vodafone takes a dig at BT payphone charges [p56]

AFRICA, MIDDLE EAST, AND ASIA-PACIFIC REGION

Q2 FY17-18

Challenges justify move towards more arms-length AMAP [p58]

  • Table 13 Vodafone AMAP Region, service revenue summary, Q2 FY17-18
  • Trouble at exchange
  • Earnings momentum
  • Table 14 Mobile data analysis for twelve selected OpCos, Q2 FY17-18 (TB)
  • AMAP core remains on track

Australia — Vodafone Hutchison Australia

VHA hands Splunk an expanded data brief [p62]

  • Group tie-in too

India

VfIn tower asset offload firmed up [p63]

  • Now for Indus

Qatar

Supplier recriminations ripple from network failure [p64]

  • VfQ stays in the black after fault, but only just
  • Anticipating VfQ 2.0

Vodacom — Kenya

Collymore takes medical leave [p66]

Vodacom eyes up Safaricom-led B2B play [p67]

  • Easy wins first

Vodacom — South Africa

VdSA underlines 5G ambition with Nokia tie-up [p68]

  • Nokia nous
  • ICASA wants more 5G collaboration

Vodacom — Tanzania

Tower stake sale finally signed off [p70]

  • Plenty of spending options

FURTHER READING

INDEX

Index

Symbols

3rd Generation Partnership Project (3GPP) 42, 46

A

Aditya Birla Group 16
Idea Cellular 7, 8, 15, 16, 59, 63
Africa 7, 15, 23, 43, 57, 58, 60, 65, 67
Angola 23
– Egypt 13, 58, 59, 60
– Kenya 20, 23, 58, 60, 66, 67
Central Bank of Kenya 67
North Africa 21
– South Africa 17, 20, 58, 60, 68, 69
Competition Commission 16, 69
– – Independent Communications Authority of South Africa (Icasa) 69
Sub-Sahara 23, 65
– Tanzania 67, 70
– Uganda 23
– Zambia 23
Afrimax Group 23
Agile Software Inc. 12
Alcatel-Lucent 43, 64, 68
Alfa Group
Altimo (Alfa Telecom International Mobile)
Turkcell (see Curkurova/TeliaSonera/separate) 65
Alpha Bank 17
Amazon.com Inc. 23, 62
Amazon Web Services 23
Amdocs 43, 48
American Tower Corp. 63
Americas
Mexico 65
– USA 6, 23, 30, 65
States
Califormia 23
– – – Ohio 41, 42
Apax Partners 16, 17
Apple 42
iOS 65
– iPhone 42
Asia-Pacific 18, 62
Australia 58, 62
National Broadband Network (NBN) 58
China 26, 32, 34, 65
China Central Television (CCTV) 62
India 6, 7, 8, 9, 10, 13, 15, 16, 18, 20, 21, 37, 58, 59, 60, 62, 63
Department of Telecommunications (DoT) 16
Malaysia 21
– New Zealand 15, 65
– Singapore 62
– Vietnam 65
AT&T 23
Axiata Group Bhd (TM International)
India (Idea Cellular, see also Aditya Birla) 7, 8, 15, 16, 59, 63

B

Bank of America 16
Merrill Lynch 16
Bharti Group
Indus Towers 7, 8, 59, 63
Bosch Group, The 33
BT Group 45, 50, 51, 53, 56
Openreach 51, 53, 54

C

Callidus Software 23
Cisco Systems 23, 44, 52
CityFibre 51, 52, 53, 54
Cloud, The 52
Convergence Partners 68
C.P.A. Czech s.r.o. 12
Credit Suisse 23
Cukurova Holding
Turkcell (see Altimo/TeliaSonera/separate) 65

D

Daisy Group 51
Deloitte Touche Tohmatsu 17, 28
Deutsche Bank 15
Deutsche Telekom 17, 18, 19, 39, 50
Europe
Netherlands 7, 50
– – UK (EE) 28, 46, 55
Germany 39
– Investments
OTE (see separate) 17
Systems Solutions
T-Systems 19
Device Insight 18, 19

E

eBay
Expertmaker 19
EE (see DT, FT) 28, 46, 55
Electricity Supply Board (Ireland) 45
Elistair 31
EMC
VMware 34, 43
Enel SpA 47
Ericsson 18, 48
Europe 7, 8, 11, 23, 25, 28, 29, 30, 32, 35, 36, 37, 38, 43, 46, 47, 50, 62
Albania 20
– Finland 68
– France 17, 31, 49
– Germany 10, 18, 20, 23, 24, 26, 32, 33, 36, 38, 39, 41, 42, 44, 60
Länder
Baden-Württemberg (Stuttgart) 44
– – – Bavaria (Munich) 18, 33, 41, 42, 44
– – – Hesse (Wiesbaden) 44
– – – North Rhine-Westphalia (Düsseldorf) 23, 38
– – – Saxony (Dresden) 44
Greece 17, 20, 36, 41, 60
Hellenic Telecoms and Post Commission (EETT, Greece) 41
Hungary 13, 20, 41
– Ireland 36, 45
– Italy 6, 9, 21, 24, 36, 37, 38, 46, 47, 60
– Luxembourg 19, 42
– Malta 16, 17, 20
Communications Authority 16
Netherlands 6, 7, 30, 36, 37, 42, 48, 49, 50, 60
– Portugal 36, 44, 60
– Romania 13, 36, 43, 60
– Spain 24, 31, 36, 38, 47, 60
Comision Nacional de los Mercados y la Competencia 47
Turkey 58, 59, 60, 65
– United Kingdom (UK) 8, 9, 21, 23, 24, 25, 28, 33, 36, 37, 38, 45, 46, 51, 52, 55, 56, 60, 62
Office of Communications (Ofcom) 55, 56
European Union 8, 37, 47, 55, 56
Council of the European Union 37
– European Commission 37, 47
– European Court of Justice 41
– European Parliament 37
Eutelsat Communications 21

F

FireEye 21
Forthnet 17
Fortino Capital 16

G

GCI 19
Outsourcery 19
GCSB, New Zealand 65
General Electric 21
Google
Android 65
– JIBE 19
GSM Association (GSMA)
Mobile World Congress 33

H

Helios Investment Partners
Helios Towers Africa, Ltd. 70
Huawei Technologies 28, 29, 32, 33, 34, 45, 46, 47, 65
Hutchison Whampoa
Vodafone Hutchison Australia Pty Ltd (VHA, (see Vodafone) 20, 23, 58, 62

I

Iliad 8, 37, 38
Indus Towers 7, 8, 59, 63
International Telecommunications Union 29, 69

J

Juniper Networks 34, 43

K

KPMG International 28
KPN 7, 21, 50
Telfort 50

L

Largo Ltd
WIND Hellas 17
Liberty Global 6, 15, 37, 39, 44, 48, 58
UPC Germany GmbH
Unitymedia GmbH 39, 41, 44
Virgin Media 51, 52, 53
– Ziggo 21, 48, 49
LinkedIn Corp. 19, 32

M

Market segments
Mobile broadband 28, 30, 65, 68
– Mobile data 30, 58, 60
– Mobile virtual network (MVNA/MVNE/MVNO) 60
– M-payment 43
– Outsourcing 48, 70
– Over-the-top (OTT) 62
– Value-added services (VAS) 47, 60, 65, 69
– Voice 11, 23, 27, 42, 56, 60
MasterCard 66
Medisante 26
Middle East 21
Egypt 13, 58, 59, 60
– Qatar 17, 64, 65
Qatar National Broadband Network Co. 17
Millicom International Cellular
MIC Tanzania Limited (tiGO/ Mobitel/Buzz) 70
– Tigo Ghana 70
Mirambo Ltd 70
MobileIron 19
MTN 20

N

NEC Corporation 43
Nedbank Group Ltd (Nedcor) 68
Neotel (Pty) Ltd (SNO Telecommunications, see also Reliance) 17
Netcracker Technology 43
Netflix Inc. 62
Nissan 21
Nokia 18, 29, 64, 68
Nomura 17
NTT 18

O

Option International 51
Oracle 62
Orange
Orange 43, 47
– Romania 43
– Spain 47
– UK (see EE) 28, 46, 55
OTE (Hellenic Telecom. Org. SA, see DT) 17

P

Perfecto Mobile 19
Phones4U 28
Pontis 19
PwC 28

S

Safaricom 15, 20, 23, 60, 66, 67
Ex-executives
Joseph, Michael 20, 66
M-PESA 20, 21, 43, 66, 67
Samsung 42
SEACOM 20
Singapore Telecom 62
Skorpios Technologies 18
Sky Network Television 15, 17
Slice 43
Smarsh
Cognia 19
SoftBank Corp. 18
Sony Corp. 62
Sony Pictures Entertainment Inc. 62
Splunk Inc. 62
Supreme Court 55, 56
Swisscom
Fastweb 47
Syntonic 65

T

Tata Group
Tata Communications
Neotel (see separate listing) 17
Tech Data 25
Technology
2G 41, 70
– 3G 10, 11, 24, 26, 30, 32, 41, 46, 62, 65
Evolved HSPA (HSPA+/I-HSPA)
MIMO 28, 31, 32, 46, 68
4G 11, 24, 26, 28, 30, 31, 32, 41, 42, 47, 52, 58, 62
Long Term Evolution (LTE) 30, 32, 33, 41, 60
LTE TDD 32
5G 10, 11, 17, 28, 29, 30, 31, 32, 33, 43, 46, 47, 65, 68, 69
– Cloud computing 11, 12, 19, 20, 23, 34, 68
– CRM 11
– Data centre 67
– DVR 62
– Femtocell 60
– Fibre 11, 27, 30, 32, 39, 45, 47, 48, 51, 53, 54
FTTP 51, 52, 53, 54
FTTH 11
– GPS 62
– IP 27, 56
– M2M 18
– MMS 60
– Narrow Band Internet of Things (NB-IoT) 11, 24
– NGN 39
– OSS 43
– R&D 33
– SIM 25, 26
– Smartphone 26, 42, 46, 62
– Spectrum 9, 28, 29, 30, 31, 32, 46, 47, 55, 56, 65, 68, 70
700 MHz 65
– – 900 MHz 55
– – 1800 MHz 28, 30, 46, 55
– – 3500 MHz 32, 46, 65
– – Advanced Wireless Services (AWS) 23
W-LAN 26, 30, 47, 52, 56, 62
Telarix 27
Tele2 7, 50
Netherlands 7, 50
Tele Columbus 41, 42
Telecom Egypt 15, 60
Telecom Infra Project 20
Telecom Italia 47, 50
Telefónica Group 20, 28, 32, 47, 52, 55
Europe
España 47
– – UK 20, 28, 52, 55
Telekom Austria Group 20
TeleManagement Forum
TM Forum 31, 43
TeliaSonera
Turkcell (see Alfa/Curkurova/separate) 65
Time Warner
Warner Bros. 62
T-Systems 19
Turkcell (see Alfa/Curkurova/TeliaSonera) 65

U

UniCredit Group 21

V

Verizon Communications 23, 29, 32
Verizon Wireless 32
Videocon Industires Ltd 62
Visa 66
Vodacom Group 15, 17, 20, 59, 60, 66, 67, 68, 69, 70
Executives
Mare, Dietlof 20
Group 15, 20, 60, 67, 68, 69, 70
– South Africa 17, 20, 58, 60, 68, 69
– Tanzania 15, 67, 70
– Vodacom Business 67
Vodafone
Africa, Middle East, and Asia Pacific Region (AMAP) 7, 8, 11, 15, 57, 58, 59, 60
Africa 7, 15, 43, 57, 58, 60, 65, 67
– – Asia 18, 62
– – Australia 58, 62
VHA Pty. Ltd (see Hutchison Whampoa) 58, 62
Egypt 13, 15, 20, 21, 58, 59, 60
– – Ghana 66
– – India 6, 7, 8, 9, 13, 15, 16, 18, 20, 21, 37, 58, 59, 60, 62, 63
Indus Towers 7, 8, 59, 63
Japan 18
– – Kenya (see Safaricom) 15, 20, 23, 58, 60, 66, 67
– – Middle East 21
– – New Zealand 15, 17, 21, 65
TelstraClear 21
Pacific 18
– – Qatar (see Vodafone and Qatar Foundation and Vodafone Qatar) 15, 17, 21, 64, 65
– – South Africa (see Vodacom) 15, 17, 20, 58, 59, 60, 66, 67, 68, 69, 70
– – Turkey 58, 59, 60, 65
Europe Region 7, 35, 36, 37, 38
Albania 20, 43
– – Cable & Wireless Worldwide 27
– – Germany 10, 11, 12, 18, 19, 20, 23, 24, 26, 32, 33, 36, 37, 38, 39, 41, 42, 43, 44, 60
KDG Holding GmbH (Kabel Deutschland) 13, 20, 26, 41, 42, 44
Greece 17, 20, 36, 41, 60
Hellas On Line (HOL) 17
Hungary 13, 17, 20, 41
– – Ireland 36, 45
SIRO 45
Italy 6, 8, 9, 21, 24, 36, 37, 38, 46, 47, 60
– – Malta 16, 17, 20
– – Netherlands 6, 7, 8, 30, 36, 37, 42, 48, 49, 50, 60
VodafoneZiggo 7, 8, 21, 23, 36, 42, 48, 49, 50
Portugal 21, 23, 36, 44, 60
CelFocus (see Novabase) 23
Romania 13, 36, 43, 60
– – Spain 19, 21, 24, 31, 36, 37, 38, 47, 60
Grupo Corporativo Ono (ONO) 13, 47
– – – Vodafone Enabler Espana 21
UK 8, 9, 12, 21, 23, 24, 25, 28, 33, 36, 37, 38, 45, 46, 51, 52, 53, 54, 55, 56, 60, 62
Cornerstone Telecommunications Infrastructure Ltd 52
Executives
Ametsreiter, Hannes 10, 20
– – Atkinson, Sean 45
– – Becker, Carlos 20
– – Berroeta, Inaki 58
– – Borgogno, Livio 21
– – Brenneis, Erik 25
– – Colao, Vittorio 6, 7, 8, 10, 12, 15, 16, 24, 25, 28, 29, 30, 31, 32, 36, 37, 38, 50, 53, 58, 59, 60
– – Cuba, Yolanda 66
– – Fitzpatrick, Brian 27
– – Georgopoulos, Aris 20
– – Gliddon, Nick 63
– – Gray, Ian 64
– – Heeran, Fran 34, 43
– – Jeffery, Nick 38, 51
– – Jones, Juliet 21
– – Joosub, Shameel 67
– – Joseph, Michael 20, 66
– – Kanaris, Achilleas 20
– – Lenza, Americo 24
– – Lloyd, Dan 62
– – Mottram, Phil 21
– – Nascimento, Joao 21
– – Nelson, Amanda 17, 20
– – Pradel, Karsten 26
– – Read, Nick 8, 15, 27, 29, 37
– – Saad, John 21
– – Takkar, Ravinder 43
– – Tenorio, Santiago 20
– – Tombleson, John 21
– – Vanoosthuyze, Frederic 43
– – Weber, Philip 20
– – Wibergh, Johan 10, 28
Ex-executives
Amzallag, David 34
– – Halford, Andy 10
– – Shuter, Rob 20
– – Thomas, Anthony 21
Group 7, 8, 16, 21, 25, 29
Partner Markets 18, 23
Africa (Afrimax) 23
– – – Kenya (Safaricom) 15, 20, 23, 60, 66, 67
R&D
Competence Centre 21
Strategy
EVO 10
Vodafone Carrier Services 27
– – Vodafone Global Enterprise (VGE) 21, 25
– – Vodafone Procurement Company (VPC) 13, 19, 49
Tomorrow Street 19
Vodafone Ventures 18
Device Insight (see separate) 18, 19
– – – Perfecto Mobile (see separate) 19
– – – Pontis (see separate) 19
– – – Skorpios Technologies (see separate) 18
xone 26
Investments & Associates
Americas (see Verizon Wireless) 32
Products
Europe 36
– – GigaTV 44
– – Liberty (Malta) 6, 15, 37, 39, 44, 48, 49, 58
– – Mobile Broadband 28, 32, 33
– – One 47
– – Recall (India) 32
– – V by Vodafone 10, 24, 25, 26
– – Vodafone TV 44, 58
Project Spring 8, 11, 29
Vodafone Qatar Q.S.C. 15, 17, 21, 64, 65

Y

Yelp 19

About

About Vodafonewatch

Report: #160
Published: December 2017
Next report: January 2018
For more information visit: Vodafonewatch