Telefónica’s own research highlights how important upgrading exchanges to fibre will be for its climate ambitions, while also helping to reduce costs
A shorter timeline will mean accelerating the transition to fibre: In Spain, Telefónica is reportedly accelerating its plans to replace its use of copper with fibre, decommissioning legacy infrastructure and some exchanges altogether. Telefónica unveiled its ‘FARO’ project in 2016, which initially anticipated full copper retirement during 2025; however, the operator has now brought that date forward to April 2024. To meet this deadline, it will need to pick up the pace: Telefónica only reached the important milestone of closing 1,000 of its approximately 8,250 copper exchanges in August 2021. A stuttering start was put down to the regulatory environment, which mandated a closure notice period of five years in order to reduce the risk that some customers could be left without service. In its latest wholesale broadband access market review, the CNMC has cut this to two years, which should provide a (much-needed) boost to Telefonica’s switch-off plan.
Decommissioning copper expected to have commercial upsides: Telefónica’s decision to shorten its copper retirement timeline was likely intended in part as a response to the recent surge in wholesale energy prices, which has impacted the financial performance of many European operators. For example, in Q3 2022, group-wide energy costs for Tele2 and Telia rose SEK80m (€7.4m) and SEK300m (€27.6m), respectively. In addition, fibre exchanges can be relatively less costly to run as they can handle around four times more access connections than copper ones and so fewer are needed overall. This opens the door to the potential monetisation of copper assets. Telefónica has already agreed the sale and leaseback of legacy infrastructure in a €200m deal with Australian investment firm Macquarie, and may be in the market for further transactions as it seeks to maximise efficiencies in the decommissioning process.
Fibre will be a major contributor to operators’ environmental targets: Beyond the potential commercial and performance gains, significant environmental benefits are expected to materialise from the telecoms sector’s migration to fibre. Telefónica previously estimated that its closure of 1,000 copper exchanges saved 1,000Gwh (or 355,000 tonnes of CO2 – equivalent to planting six million trees). In reaching that milestone, the telco had also recycled 7,140 tonnes of electrical and electronic equipment waste, and reused more than 128,000 cards in its network. At COP27 in Egypt, Telefónica published its first lifecycle report on connectivity solutions, stating that the environmental impact of its Spanish fibre network is 18 times less than that of copper. Such findings underline the importance of copper switch-off to Telefónica achieving net zero emissions in its main operations by 2025 and across its entire value chain by 2040.
