• VfD yet to follow through with commitments made to secure Unitymedia acquisition, while rivals maintain objections to the deal.

O2 still waiting on cable delivery

O2 still waiting on cable delivery

Source: Scott Graham / Unsplash

German media reports highlighted that, more than a year after agreeing a wholesale contract, Telefónica Deutschland (O2) is still not able to access Vodafone Germany’s (VfD) “Gigabit”‑ capable fixed network.

In May 2019, VfD agreed a deal to provide O2 with a range of wholesale converged services using its cable and full‑fibre infrastructure, including assets to be gained through the acquisition of Liberty Global’s Unitymedia cableco (Vodafonewatch, #174). The agreement was a key element of the remedies that helped secure European Commission clearance of the proposed Vodafone acquisition of a range of Liberty Global assets, with Germany’s Unitymedia the jewel in the crown.

The reasons why O2 is yet to launch services leveraging the VfD network is unclear, with an O2 spokesperson only saying that the offering is not yet ready and providing no timeframe for a service launch.

When it comes to fruition, the deal will enable O2 to offer triple‑play services using an up‑to‑300Mbps portfolio of broadband products across the VfD cable footprint, covering about 24 million premises. O2 has entered into a similar agreement to use the Gigabit‑capable infrastructure of Tele Columbus (without the speed cap in place as part of the VfD deal), but services based on the wholesale offering are also yet to materialise. Currently, O2 is dependent on wholesale services from Telekom Deutschland for its current VDSL‑based fixed‑line offerings.

While the deals with Tele Columbus, VfD, and the incumbent are intended to enable O2 to offer fixed services in well‑populated areas, Telefónica Group is also exploring options for rolling out wholesale fibre infrastructure in more remote parts of the country through its Telxius infrastructure management business (Telefónicawatch, #146).

VfD has its hands full

Preparing inherited infrastructure for new wholesale propositions is not the only complication Vodafone is facing relating to the expansion of the German OpCo.

The acquisition of the Liberty Global business in Germany (along with operations in the Czech Republic, Hungary, and Romania) faced considerable objections from local rivals at the time. Despite its clearance by the European authorities in July 2019, the legal objections are continuing. Telekom Deutschland, Tele Columbus, and fellow cableco NetCologne are appealing the decision through the European courts, claiming the deal heavily damages competition in the country, particularly in the pay‑TV sector, and questioning the fairness of the permitted remedies that accompanied the clearance.

Meanwhile, VfD has previously flagged progress with the integration of Unitymedia and the German OpCo, beginning migration of the cableco’s pay‑TV customers to the Vodafone GigaTV offering, and having phased out the cableco’s branding in March 2020 (Vodafonewatch, #184). It is also said to be migrating its own DSL fixed broadband base to its expanded cable network, with tens of thousands of customers being switched per quarter as part of a revised €2bn GigabitInvestment Plan in the country that runs until 2021 (Vodafonewatch, #158, #177). However, there remain approaching three million fixed‑line customers on legacy connections.