Vodafone will increase capital spending on its UK operations by 50 per cent, to more than £900 million, as it prepares commercial LTE launch and continues work on fixed-mobile network integration following its purchase of Cable & Wireless Worldwide (CWW) last year.
The investment boost, says Vodafone, will support preparations for “ultra-fast 4G services”, which are now scheduled for an “end of summer” launch.
“We’re bringing together the best of mobile and fixed communications to help our business customers make their communications work for them,” said Vodafone UK chief executive Guy Laurence in a statement.
“For consumers, it’s another important step towards the arrival of our ultra-fast 4G service later this year. It is also great news for the country. We’re investing in vital national infrastructure that can help play an important role in supporting growth in the wider economy.”
After spending more than £800 million on UK’s 4G spectrum auction in February, Vodafone had been reportedly on course to launch commercial LTE services in either May or June.
There has been some speculation, though, that Vodafone is biding its 4G time until Apple launches an LTE-enabled iPhone capable of supporting 800MHz and 2.6GHz bands.
The so-called ‘digital dividend’ spectrum (800MHz) is particularly important, as its better for indoor coverage than the higher 2.6GHz frequencies that Vodafone also acquired in the 4G auction.
EE – a UK joint venture between France Telecom and Deutsche Telekom – launched LTE services in the 1800MHz frequency band on 30 October 2012 after getting the green light from regulator Ofcom. The launch was backed up by an LTE-enabled iPhone 5 supporting 1800MHz.
Despite EE’s head-start, Vodafone chief executive Vittorio Colao has previously maintained that customers won’t notice much difference between Vodafone UK’s HSPA+ network and EE’s 4G network, which is still the only commercial LTE network up and running in the UK.
Speaking at the conference call of Vodafone’s full-year financial results, on 21 May, Colao described 4G at 800MHz as “true LTE”.
With the increased capital spending announcement, Vodafone UK says it’s on track to deliver indoor coverage to 98 per cent of the UK population by 2015.
According to a Financial Times report, Vodafone is aiming for the CWW business to be accretive to earnings per share and free cash flow per share within the first 12 months of completion (after synergies and before integration costs).
However, the task has been made more difficult due to an expected further deterioration over the next two years in revenues. Vodafone says this is down to a “poor pipeline and declining legacy business” and under-investment in new services.