London: Vodafone will increase investment in its UK network by more than 50 per cent to nearly £1 billion (Dh5.6 billion) this year as it prepares for the launch of next generation 4G mobile services and integrates Cable & Wireless Worldwide.
The British company, which wants its network to be the best in the country, has delayed the launch of its 4G services to the end of the summer. Vittorio Colao, chief executive, said last month that the delay to the 4G launch was to ensure the best and broadest coverage, although some analysts have suggested that it has been timed to coincide with the next iPhone launch.
At the same time, it needs to invest in integrating the fixed-line network acquired in the £1 billion takeover of the UK’s Cable & Wireless Worldwide. One person familiar with the situation said that Cable & Wireless Worldwide had suffered from underinvestment, which meant that Vodafone needed to improve as well as integrate the networks with existing business.
Vodafone will reveal the budgeted hike in UK capital expenditure this week, saying that spending will increase by more than £300m, up from £600m last year.
It has already invested heavily in acquiring the frequencies needed to support 4G services, having spent the most of all groups in securing the widest portfolio of available spectrum in the recent Ofcom auction at £802m. Vodafone has pledged to deliver indoor coverage to 98 per cent of the UK population by 2015.
Telecoms groups are pinning hopes on being able to reverse the long-term decline in revenues by offering higher-margin superfast mobile broadband services.
Network quality will be a key point of difference in the fight for higher spending 4G customers between the four mobile operators, which will all have rival offers for the first time this year.
Guy Laurence, Vodafone UK chief executive, said: “This investment is further evidence of our commitment to deliver our best ever network. We’re bringing together the best of mobile and fixed communications to help our business customers make their communications work for them.
“For consumers, it’s another important step towards the arrival of our ultra-fast 4G service later this year. We’re investing in vital national infrastructure that can help play an important role in supporting growth in the wider economy.”
Vodafone is aiming for the Cable & Wireless Worldwide 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, its business case on acquisition assumed further deterioration over next two years in revenues given what it described as a “poor pipeline and declining legacy business” and under-investment in new services.
