Broadband speed war on the cards as Vodafone agrees tie-up deal with CityFibre to offer 5million homes an 'extremely fast' service by 2025
- Aim listed CityFibre’s share price has increased over 30% this afternoon
- Partnership deal could see lower broadband packages and higher speeds
- Vodafone aims to reach 1m homes by 2021 and 5m by the end of 2025
AIM listed CityFibre’s share price has rocketed on news of the partnership and is currently up 30.06 per cent to 56.25p.
Vodafone’s shares are up nearly 2 per cent.
Speeding up: Vodafone is ramping up its bid to shake up the UK’s broadband market after announcing a tie-up with CityFibre
In a damning indictment of the state of Britain’s broadband network, Nick Jefferey, Vodafone UK’s chief executive, said: ‘The UK has fallen far behind the rest of the world, trapped by the limited choice available on legacy networks.’
As part of its agreement, Vodafone plans to offer ‘extremely fast and reliable’ broadband services to 5 million homes by 2025.
The service will be ‘capable of Gigabit speeds (1,000 mbp), Vodafone said.
A Vodafone spokesman told This is Money: ‘Our partnership with CityFibre is proof that a business model can be found for full fibre that won’t lead to higher costs for the industry and consumers.
‘We will reveal more details on retail pricing later next year when we come to connect up the first customers to ultra-quick true fibre broadband.’
The two companies will start work on getting its broadband services to 1 million homes and business across 12 towns and cities by 2021 towards the beginning of next year.
Some customers will have access to the service by the end of 2018.
The two companies will then have the right to extend their agreement to cover another four million sites across 50 towns and cities by 2025.
Plans: As part of its agreement, Vodafone plans to offer ‘extremely fast and reliable’ broadband services to 5 million homes by 2025
Tie-up firm: CityFibre has seen its share price rise over 30 per cent this afternoon
With the parties keen not to reveal detailed plans to rivals like BT Openreach, information including which locations will enjoy the initial rollout of the service, are yet to be revealed, but look set to emerge within the next few months.
The two companies promise to bring fast fibre optic broadband to households, businesses and public sector sites such as schools, hospitals and GP surgeries, while delivering half of the UK Government’s target of ‘full fibre’ to 10 million homes and businesses.
According to Vodafone, the fibre network CityFibre has offers broadband connections that are ‘vastly superior to outdated networks that rely on old copper telephone lines to connect to the customer’s premises.’
As part of the deal, Vodafone will have exclusive rights to market CityFibre’s network during the construction phase.
After that, Vodafone’s rivals, including Sky, BT Openreach and TalkTalk, will all be able to use the network.
The first phase of the project is expected to be worth more than ?500million over 20 years.
Rival: BT Openreach, which recently announced a swathe of price hikes, will be keeping a keen eye on Vodafone’s latest tie-up
Vodafone’s Nick Jeffery said: ‘Vodafone UK Chief Executive Nick Jeffery said: ‘Vodafone is already playing the leading role in building the Gigabit Society across Europe by providing customers with high-speed, high-quality broadband.’
Meanwhile, Greg Mesch, chief executive of CityFibre, said: ‘This agreement will unlock the UK’s full fibre future and is a major step forward in delivering our vision for a Gigabit Britain.
‘With this commitment from Vodafone, we have a partner with whom we can transform the digital capabilities of millions of homes and businesses and establish an unassailable wholesale infrastructure position across 20% of the UK broadband market.’
Progress: According to Vodafone, the fibre network CityFibre has offers broadband connections that are ‘vastly superior to outdated networks’
The Government’s Minister for Digital, Matt Hancock, said: ‘We warmly welcome this new partnership between CityFibre and Vodafone as an important step to drive investment and help build a full-fibre Britain.
‘Reaching an additional five million premises by the middle of the next decade would be a significant contribution to connecting modern Britain and meeting our manifesto commitments.’
In September, Mr Hancock said the Government was on track to make superfast broadband available to 95 per cent of the UK by the end of this year, and said re-investments in the network could help connect extra homes and businesses from next year.
Jonathan Oxley, competition group director for communications watchdog Ofcom, said the increased competition will ‘help support the the UK’s future economy.’
He added: ‘We want to see commitment to full-fibre investment right across the industry.’
In March, BT reached an agreement with Ofcom to legally separate its infrastructure arm Openreach following a drawn-out battle with the regulator, creating a legally separate company with its own staff, management and strategy, while remaining a subsidiary of BT.