Is Vodafone Bracing Itself for a Big Battle in Europe?

As Vodafone moves closer to its long-anticipated sale of its stake in Verizon Wireless, Assistant Professor Ronald Klingebiel sees evidence of a new seriousness with which the UK firm is bracing itself for increased competition in its core markets in Europe.

Dr Klingebiel, who has researched and consulted the telecoms industry for more than a decade, says that Vodafone may be amassing financial firepower to position itself more aggressively in an increasingly “multi-play” market, with broadband, telephony and TV provided as an integrated package.

“The revived discussions about Vodafone selling its 45 per cent stake in Verizon Wireless indicate an increasing focus on its core markets,” said Dr Klingebiel.

“Both the US and European telecommunication markets stand to face some tough competition with the increasing move towards converged triple-play offers.

“To weather these impending storms, Vodafone is right to sell the stake so it can concentrate on its priority markets in Europe. Verizon Wireless has always been an unusual engagement in that it was mainly a capital investment project rather than an operational subsidiary like Vodafone Deutschland.”

As well as its UK heartland, Dr Klingebiel added that Vodafone is now the biggest German cable TV network provider with around nine million customers and it has already started offering TV services in the Netherlands and Portugal. The UK will surely feature too. And reports suggest the deal will also see Verizon sell back to Vodafone a 23 per cent stake in Vodafone Italia.

“The proceeds from the sale, if not passed on in forms of dividends, could improve Vodafone’s debt position following the recent Cable & Wireless and Kabel Deutschland deals, and provides Vodafone some leeway to further expand its network presence in Europe,” said Dr Klingebiel.

“Such moves provide the capacity and level of integration necessary for competing effectively in a future pan-European market.”

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David Dungay

Editor - Comms Business Magazine
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