As VodafoneZiggo is under pressure to reinvent its business model, pricing and product innovation are key. This is the reason that it brought its pricing in line with KPN, as it can no longer charge a premium, because it no longer offers a speed advantage. However, we still believe VodafoneZiggo can maintain a solid market share, as competition also depends on the brand, marketing and ancillary services. Moreover, historically, KPN has been able to compete with VodafoneZiggo on price, while its xDSL product was slower than VodafoneZiggo’s HFC (cable) offer.
Moreover, the Dutch press (Het Financieele Dagblad) reports that both ODF and Delta Fiber carry quite a bit of debt. This could become a challenge if interest costs rise. Also, it has proven difficult to gain market share from KPN and VodafoneZiggo. Therefore, it would be beneficial to them if KPN or VodafoneZiggo were to start using their networks. VodafoneZiggo will already do so for 200k homes on the Delta Fiber footprint where it does not have a network itself. As VodafoneZiggo announced a plan to upgrade its network to Docsis 4.0, a near-term wholesale agreement is not likely. We expect VodafoneZiggo to require significant equity upside, being part of a transaction that sees its customers moving to another network.