Vodafone Looks at Infrastructure in Terms of Business Advantage

As most connectivity providers globally adjust to tougher business model conditions, most are looking at ways to reduce cost and sell non-core assets. So what is “non-core?” Sometimes that is whole operations in geographies; at other times it is towers or data centers or lines of business.

In the area of tower ownership, for example, there still seem to be situations where ownership is more strategic, as well as areas where infrastructure ownership does not offer as much advantage, and sharing makes sense.

Vodafone, for example, is looking at sharing both the passive tower grid and the active 5G network elements, but not in all geographies.

“We want to share active equipment outside major cities, which we broadly defined cities with less than 100,000 populations,” said Nick Read, Vodafone CEO. In the United Kingdom, in dense urban areas Vodafone has business strategies materially distinct from its partner O2.

So in urban areas Vodafone will keep its own infrastructure, sharing with O2 in less-dense areas.

The point is that infrastructure ownership still makes sense when it offers business advantage. When such ownership does not convey much business advantage, it can be safely shared with competitors.

In general, that is the issue with infrastructure sharing and wholesale generally. Such mechanisms do enable lower costs. But doing so also reduces room for differentiation of business strategy, prices and features.