VODAFONE has entered into exclusive negotiations with the ESB for the rollout of a new €400m fibre broadband network to 450,000 Irish homes and businesses.

The utility company has been seeking a commercial telecoms partner for over a year to help it with the development of the new fibre network. The proposed deal, which will see ESB's electricity lines being used to deliver fibre broadband, could see Vodafone going head-to-head with Eircom and UPC as a standalone fibre broadband provider.

"ESB has entered into exclusive negotiations with Vodafone Ireland as the preferred bidder to form a Joint Venture Company, which will roll out fibre to homes and businesses across Ireland," a Vodafone spokesman told the Irish Independent.

The new network will be based outside Dublin and concentrated in towns of at least 4,000 premises.

The Government is currently moving legislation through the Oireachtas which will allow the ESB to use its infrastructure for the delivery of fibre broadband. Politicians have expressed hope that the new fibre network could offer more choice for broadband in rural Ireland.

The move is a clear signal that Vodafone is seeking to diversify its core mobile business. Like its rivals, the company faces falling average revenue per user in the mobile market.

It is currently reported to be bidding for Spain's largest cable company, Ono.

Vodafone recently gained €98bn by selling its stake in US telecoms provider Verizon. The company said that it would return €70bn to shareholders.

The new network is likely to offer competition to Eircom and UPC. Eircom is currently extending its fibre-connected network to 1.4 million premises around the country. UPC, which only serves cities and large towns, is currently limited to 700,000 premises.

It is not yet clear whether a new fibre partnership between the ESB and Vodafone will allow other telecoms operators to gain access to ESB's network. However, the ESB has stipulated that it hopes to engage in a phased rollout, with the first section extending to 1,300km of fibre.

"The core activity will be the deployment of Fibre-To-The-Building to individual homes or premises in Ireland, in selected urban areas, using the ESB electricity overhead and underground infrastructure," said the ESB tender document.

"Phase 1 is expected to focus on urban and semi-urban conurbations outside of Dublin city. It is anticipated that in the deployment of the network, this electricity infrastructure will be utilised where and to the extent it is practical to do so."

Irish Independent