Vodafone strikes deal with BT to expand broadband coverage

Vodafone has struck a deal with BT to use its network to offer broadband to up to half a million customers in three British cities.

BT, via its Openreach network unit, is under pressure to upgrade rapidly Britain’s copper telephone lines to “full fibre” connections but needs to bring millions of customers who use other broadband brands on board to justify the cost.

BT supports the government’s plan to offer “gigabit” speed broadband to all UK premises by 2025 if certain conditions are met. That would include a switch-off date for older copper networks once full-fibre lines have been laid, which would spur a mass migration of customers on to the new network.

Openreach said last week it would offer steep discounts to its customers — the broadband service providers that also use its network — if they committed to heavy marketing campaigns at the local level and to connect large blocks of customers to faster fibre services.

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The offer included free line rental for a year if the end customer switched to fibre from a Virgin Media cable line.

Vodafone has an agreement in place with smaller fibre builder CityFibre but has taken advantage of the Openreach discount to agree to expand its fledgling UK broadband service to Bristol, Birmingham and Liverpool.

Full-fibre services offer download speeds roughly 20 times the current UK average. But only 8 per cent of the country can access such a connection and the race to speed up the country’s telecoms networks has become a battleground for the industry, pitting BT against Virgin Media and several smaller companies building local fibre networks.

Sky has held talks with Virgin Media’s owner Liberty Global about teaming up to build new fibre networks to compete with Openreach, while TalkTalk plans to team up with an infrastructure investor to back a new network.

Clive Selley, chief executive of Openreach, said he was determined it would remain the “partner of choice” for the industry.

BT has estimated that the cost of upgrading the country to full fibre would be between £25bn and £30bn, and argues that it needs to ensure consumers switch to the new networks to justify that investment.

The discounts, which run until September 2022, are designed to bring on board companies such as Vodafone to stimulate that demand.

The deal with Vodafone comes days after the mobile phone company revealed it had won a contract with Virgin Media to switch 3m customers from BT’s EE network to its own.