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Strengthening FTTx fiber optic business

Development of a Germany-wide FTTH model

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  • Project Experiences

Task

Fibre optic infrastructure is the core of the digital economy and an emerging growth area for distribution system operators (DSOs).

innogy Consulting was commissioned to support one of the largest German distribution network operators in penetrating the fiber optic market. In particular, the task was to support the Chief Operating Officer (COO) in developing a FTTH (Fibre-to-the-Home) strategy.

Our client's existing FFTx business was almost exclusively limited to FFTC (Fibre-to-the-Curb) and not focused on growth. This was to be changed with this project.

Strategy

Our approach was to develop a Germany-wide FTTH model that evaluates the potential of more than 10,000 municipal utilities. Another important component of the project was the development of a target structure for the business.

Implementation

This included an in-depth analysis of the German telecommunications market and the legal framework. Based on our comprehensive analysis, we then detailed out the strategic FTTH positioning and identified the best way to tap into a competitive, growing market with high infrastructure investment requirements.

To this end, we have developed a model that uses local investment conditions - such as available bandwidths - to determine in which parts of Germany it makes economic sense to upgrade to FTTH. In addition, we have identified possible business models and carried out financial assessments of more than 10,000 investment opportunities.

By using "wargaming", we have analysed opportunities for partnerships and anticipated possible activities of competitors. In addition, we have developed a target operating model that allows us to leverage synergy effects with our client's core business while taking legal requirements into account.

Results

The results of our analysis led to an investment recommendation of more than one billion euros - primarily in the FFTH sector - to the Board of Directors, which was implemented by our client.

In addition, we have developed recommendations for profitable investments in building infrastructure and encouraged the establishment of a separate telecommunications sales unit.

The most important result, however, is the development of a tailor-made FTTH control model for Germany, which our client will continue to use for investment audits in the future. Using this model, our client was able to double the number of active FTTx clients between 2017 and 2018.

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