Telecom Lead Europe: France Telecom and Britain’s Vodafone will jointly develop a fiber optic network in Spain.

France Telecom and Britain’s Vodafone compete in several key markets in Europe. The joint effort is part of their initiative to reduce Capex and Opex.

The companies said they would develop two complementary networks, each reaching 3 million buildings, in over 50 cities.

Both companies said they guaranteed mutual access and use of respective infrastructure.

For Vodafone Group, Spain contributed 9 percent of the revenue of in H1 2012-13. Presence in Spain offers only 4 percent operating profit to Vodafone Group.

Vodafone Spain generated around £4.7 billion revenue and £1.2 billion EBITDA in the first half of current fiscal 2012-13. With 18 million customers (40 percent prepaid), Vodafone has 29 percent market share.

As part of Vodafone’s 2015 vision strategy, the mobile giant is looking at £300 million Opex reduction in FY 2013-14.

Vodafone’s network vision says it would like to target stable network utilization with 50 percent usage growth. It also targets 91 percent European outdoor data coverage and single RAN will give 44 percent of European footprint. 47 percent of European footprint will have high capacity backhaul.

France Telecom faces tough competition from Bouygues, SFR, Telecom Italia and Vodafone Group in its domestic operations, which account for more than half of its revenue and profit. This has resulted in France Telecom losing its market share and recording lower margins and profitability.

To trim down its mounting loss, the company is reducing its exposure in the weaker markets and is trying to strengthen its position in the core markets.

Recently, France Telecom’s Spanish subsidiary – Orange Spain has acquired Simyo, a mobile virtual network operator (MVNO) from Dutch telecom giant KPN.  The deal will consolidate France Telecom’s position in the Spanish market where it faces stiff competition from market leader Telefonica.

Arvind Krishna
[email protected]