Deutsche Telekom boosts it fiber build-outs

The German government has designated $13 billion of funding for rural broadband subsidies. (Getty Images)

Deutsche Telekom’s fiber build-outs have lagged behind other European operators. But DT recently set a goal to serve 10 million households with fiber-to-the-home by 2024.

DT started 2021 with only 2.2 million homes passed. According to the analysts at Jeffries, DT’s fiber build-out will amount to about 2.5 million additional homes passed each year through 2024. The stated capex for this fiber build-out is between $9.14 billion and $9.73 billion per year.

Similar to American broadband providers, the German operator saw an uptick in demand for broadband during 2020 because of the pandemic and the need to work and learn from home.

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Analysts from New Street Research said in February that DT’s fourth quarter 2020 results showed “trends in broadband and fixed line that have seen some of the best results in a decade” and highlighted the strength of DT’s brand during the pandemic. “For the foreseeable future, it looks like this tailwind will continue to be a support for DT,” wrote the New Street analysts.

Executives from DT have also said they expect the whole of Germany to be covered by FTTP by 2030. The German government has designated $13 billion of funding for rural broadband subsidies, with the potential for additional funding from the European Recovery Fund.

In terms of DT’s claims that all of Germany will have access to fiber by 2030, the New Street Analysts said, “At this stage, we believe that this is largely a political statement and should not be read as an assumption that DT is just going to materially increase FTTH capex beyond 2024.” Rather, they think DT will likely maintain its 2.5 million home build rate from 2024 to 2030, and this would take DT to about 25 million homes covered, or about 60% of the German population.

“We believe this is meant to signal to politicians that DT is trying to be ‘part of the solution,’ rather than seeing DT as ‘part of the problem,’ which might then usher in more aggressive remedies,” stated New Street.

Further subsidies that might come from the European Recovery Fund could help this target to be increased.

Fiber in the U.S.

Fiber rollouts are also increasing in the United States. During 2020, a number of wireline telecom companies in the U.S. announced plans to deploy FTTH to markets they previously served with copper. New Street Research is forecasting that homes passed by fiber will increase from 40 million to 60 million over the next 10 years. That would increase the percentage of homes passed from 25% to 35%.

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And there’s currently quite a lot of money on the table in the U.S. targeted to closing the digital divide. The government has expressed a preference for gigabit speeds that can be provided by fiber.