Is the EU Ready for a Gigabit Society?
Western Europe's fibre rollout was steady in 2021, with 16m homes passed, including 5.5m in France, 3.3m in the UK, 2.2m in Germany, 1.6m in Italy, and 1.0m in Spain. Fibre rollout looks to remain elevated at 18-20m homes passed in 2022-23 before finally leveling out.
Most markets now have plans for complete fibre coverage (>90%). While slightly slower than expected, the pace of rollout is nonetheless the fastest pace observed to date. In 2022, Fibre-to-the-Home (FTTH) homes passed is expected to increase another 18m to 131m (61% of premises).
More cablecos are converting to fibre as FTTH trumps cable. However, there remains a question about the tech upgrade path for some of Europe's biggest cablecos.
FTTH has surpassed 50% of premises in Europe, but adoption lags. Only 18% of customers are taking the service. Migrations (+9m) are accelerating, but fixed broadband growth is slowing post the COVID-19 pandemic (broadband adds -60% y/y). So Average Revenue Per User (ARPU) uplift is increasingly essential, either from tiered pricing structures on retail/wholesale and/or price hikes.
Rising rates have affected infrastructure valuations, but fibre has continued to attract significant capital inflows owing to the dry powder raised during the "free money" era. Some of this capital may go into fibre overbuild, with a potential risk of excessive committed capital in the UK and Belgium. Germany, Netherlands, and Switzerland have a long way to go in fibre deployment but have not seen similar intensity. Whether this slows as interest rates rise remains to be seen – so far, there is no sign of a slowdown of the fibre rollout.
