Vodafone Wades into Portuguese ADSL Market

The global mobile giant, Vodafone, has launched a fixed broadband ADSL service in Portugal as part of its strategy to meet the total communications needs of its customers. In a statement, Vodafone said it was launching its Vodafone Casa Duplex ADSL for residential customers, supported on its own ADSL2+ network and using the existing cables in the customer's home. The new 24Mbps service complements the company's existing Vodafone Casa offer, which also includes the T0 Voz and T1 Net Plug & Play services. In a statement, Vodafone said its Casa Duplex ADSL is the service recommended for those who want high-speed internet access of up to 24Mbps, plus voice calls without any standing charge and with free calls to the fixed network and the best rates to mobile networks, while retaining their existing phone and telephone number.

Meanwhile, the company has selected the Franco-American telecoms vendor, Alcatel-Lucent, to roll out its triple-play-capable network solution to provide DSL-based services. In a statement, Alcatel said it won the three-year frame agreement from Vodafone to provide high-quality broadband services, including high-speed internet and voice to residential customers, in what is Vodafone's first wireline broadband network for its customers. As part of the deal, Alcatel-Lucent will deploy its TPSDA (triple-play service delivery architecture), which combines access and subscriber service delivery into an integrated DSL solution, as well as its next-generation converged solutions.

Outlook and Implications

Keeping Tabs with the Competition: The Portuguese fixed-line network is the culmination of the company's quest to diversify its mobile-only portfolio in Portugal. Despite a strong grip as the second-largest mobile operator in the country—with market share of 36.3%—Vodafone has been bothered about the potential fixed-cum-mobile synergies of Portugal Telecom and Sonaecom. The company had attempted to buy the small Portuguese fixed-line telco, Oni, in November 2006, but that failed as Oni was sold to a private equity consortium. The broadband offer strengthens Vodafone's market position, helping the operator to match the synergies available to its core rivals. With Vodafone's entry into the fixed market, the three mobile operators in Portugal—Portugal Telecom, Vodafone and Sonaecom—all offer fixed services in the country.

The Demise of the Mobile-Only Approach: Vodafone Portugal's entry into the fixed telecoms market continues an ongoing trend among Vodafone’s operating companies to diversify beyond their mobile-only strategy. The company already offers broadband in Germany, Spain and the United Kingdom, and has an agreement with FastWeb for a broadband service in Italy. Vodafone also already provides mobile broadband services across many of its markets, especially where it has rolled out its 3G network. However, the push into fixed broadband suggests a tacit acknowledgement that mobile broadband will not match the speeds available on fixed broadband services. Vodafone Portugal is definitely not going to be the last of the company's units to launch broadband services, and others across Europe, such as the Netherlands, could follow soon. Vodafone has stated that it hopes to enter the fixed telecoms market via an asset-light strategy, although it is uncertain if, and how long, it will stick with the policy.