Wednesday, 25 November 2020

Deutsche Telekom and Telefonica Germany strike 10-year FFTH wholesale deal

by Harry Baldock, Total Telecom
Wednesday 07 October 20

The two rivals have agreed to share the cost of fibre, with Deutsche Telekom pledging to use the funds to boost its fibre rollout

German rivals Deutsche Telekom (DT) and Telefonica have today announced an extension and expansion of a previous agreement signed back in 2013 that allowed the latter to buy copper-based VDSL line from the former. The new deal, which covers the whole of Germany, will extend the previous agreement by 10 years and allow Telefonica to use DT’s fibre-to-the-home network for the first time…

German rivals Deutsche Telekom (DT) and Telefonica have today announced an extension and expansion of a previous agreement signed back in 2013 that allowed the latter to buy copper-based VDSL line from the former.

The new deal, which covers the whole of Germany, will extend the previous agreement by 10 years and allow Telefonica to use DT’s fibre-to-the-home network for the first time; indeed, DT notes that this is the first time any competitor has been given access to its fibre network.
 
While the financial details of the deal have not been released, the move seems like something of a win-win for both companies. Telefonica will now not only be able to deliver 1 Gbit/s fibre to its customers, but will be able to expand its offerings to a much larger broadband market.
 
“The long-term cooperation with DT gives us planning security,” said CEO of Telefónica Germany, Markus Haas, CEO of Telefónica Germany. “In future, we will be able to offer our O2 customers access to the fibre optic network, especially in large cities. On this basis we can offer our customers first-class convergent products.”
 
Meanwhile, the funds gained for DT will allow them to “significantly accelerate its fibre-optic buildout in the coming years”. Currently, the operator’s VDSL legacy network spans 33 million premises, while FTTH only reaches 1.8 million.
 
"The buildout of fiber-optic broadband networks is extremely expensive,” said DT’s managing director Dirk Wössner. “One kilometer of civil engineering alone costs approximately €100,000. Thousands of diggers are required to supply large areas of Germany with the fast Internet. And we need to lay even more kilometers of fiber-optic cable. As other network-building companies, we pay for this in advance in order to earn back these investments on the market. Therefore, the agreement with Telefónica is an important additional lever." 
 
This may not be the only deal of its type we see from DT in the coming months, with the company noting how common this type of arrangement was becoming in the industry and suggesting similar deals could be made with other players within the German market.
 
“With regard to open networks, DT wants to conclude similar agreements with other market participants,” said Wössner, noting DT’s existing arrangements with Deutsche Glasfaser, Süwag, and Stadtwerke Münster.
 
The deal will require regulatory approval and is expected to close in early 2021.
 
 
Will the German fibre market see yet more wholesale agreements in the coming months? Find out what the experts think at this year’s Connected Germany
 
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