Telefonica will rent its fibre optic network to Vodafone for five years

TelefonicaTelefonica: a more bullish message on telco sector

Telefónica has reached an agreement with Vodafone which will allow the latter to access its fibre optic network both in non-regulated areas (the 66 most populated cities in which Telefonica is not obliged to share its infrastructure) as well as in a significant part of the regulated zones.

For Bankinter this is good news for Telefonica for two reasons.

Firstly because this agreement implies a stable, recurrent revenue flow during the next five years. And secondly, it’s an agreement based on volume at a time when one of Telefónica’s biggest fears is that the regulator obliges it to share its red in an ad hoc way (requests for access on a one-to-one basis and only when the rival has/obtains a client). So this is an important precedent for the company.

The agreement is not exclusive and is open to other operators.

According to Vodafone, the benefits are obvious “whenever it reduces its investment effort to improve its fibre optic coverage”.

We have seen this kind of agreement, which bridges the gap, in mobile networks with both operators who have their own network and those who don’t. We don’t expect the news to have any significant impact on the stock price.

 

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.