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Phone Companies May Save Up to $77 Billion in EU Broadband Plan

The European Union proposed measures to reduce telephone companies’ expenses for wiring up new buildings while boosting access to high-speed broadband across the region.

The EU proposal, which will trim how long it takes to set up masts and antennas and allow collaboration between carriers, utilities and builders, could cut the cost of rolling out high- speed Internet by 30 percent. That may save companies including Telefonica SA (TEF) and Deutsche Telekom AG (DTE) as much as 60 billion euros ($77 billion), the European Commission said in a statement today.

“In most places, today’s rules hurt Europe’s competitiveness,” said Neelie Kroes, the commissioner in charge of the digital agenda. “Everyone deserves fast broadband. I want to burn the red tape that is stopping us for getting there.”

Phone companies are investing in deploying fiber optic across Europe as they seek to tap higher profit margins from Internet services while revenue from traditional voice and text- messaging services declines. In Spain, Telefonica and Jazztel Plc (JAZ) signed an agreement in October to jointly deploy fiber-to- the-home networks for 3 million real-estate units.

Civil engineering works, such as digging up roads to deploy fiber, account for as much as 80 percent of the cost to deploy high-speed networks, the commission said.

“Every step to boost savings is positive for European phone companies, even though the market is still too regulated,” said Ivan San Felix, a Madrid-based analyst at Renta 4 Banco SA. (R4) “Authorities will continue to push for lower broadband prices, which in the end is good for consumers.”

The EU is increasingly taking measures to boost competition and consolidation in the European telecoms market as phone companies face declining profitability, putting pressure on their stock.

To contact the reporter on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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