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Vodafone Expands UK Broadband Coverage With Openreach Deal

Zacks Equity Research

Vodafone Group Plc VOD recently inked an agreement with Openreach, the digital networking business unit of BT Group Plc, to extend its broadband coverage in the United Kingdom. The deal would enable Vodafone to offer its Gigafast Broadband service to three new cities in the country, namely Birmingham, Bristol and Liverpool by spring 2020 through Openreach’s Fiber-to-the-Premises (FTTP) network.

Vodafone Gigafast Broadband service reportedly offers users a download speed that is about 20 times faster and upload speed about 150 times swifter than the average broadband connection available in the United Kingdom. The service is either currently live or being planned to be introduced in 15 cities in the near future with the latest inclusions.

The FTTP network of Openreach is one of the most extensive broadband networks in the United Kingdom, covering more than 1.9 million premises. Consequently, it is expected to provide Vodafone an unrivalled coverage to promote its services and thereby augment its subscriber base. Notably, Openreach aims to expand its connectivity to 500,000 premises in the three cities by mid-2021 under phase one of its strategic agreement with Vodafone.

In addition to fiber network connectivity, the company has been focusing on nationwide deployment of 5G technology. Vodafone 5G is currently available in parts of Birkenhead, Birmingham, Bolton, Bristol, Cardiff, Gatwick, Glasgow, Lancaster, Liverpool, London, Manchester, Newbury, Plymouth, Stoke-on-Trent and Wolverhampton. The company aims to roll out this superfast technology in additional locations in the imminent future.  
Powered by Ericsson’s ERIC leading-edge 5G technology solutions, Vodafone recently switched on 5G network with unlimited data plans for consumers and business customers in seven U.K. cities, including London. Ericsson’s advanced spectrum sharing capabilities are likely to allow Vodafone to extend the scope of 5G in its network. With its largest ever capital investment, the mobile operator aims to provide Londoners with an ultra-fast 5G and 4G network without any limit.

Riding on such growth drivers, the stock has gained 6.5% year to date while the industry declined 7.5%.

Vodafone currently has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the industry are Orange ORAN and KT Corporation KT, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Orange has long-term earnings growth expectation of 11.9%.

KT Corporation has long-term earnings growth expectation of 11.5%.

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