Vodafone mulling UK TV offering and ‘organic’ convergence after Liberty-Telefónica deal

Vodafone will focus on developing its own organic converged offering in the UK market in the wake of Liberty Global’s deal with Telefónica to combine Virgin Media and O2, and is to look again at developing a TV proposition, according to CEO Nick Read.

Speaking to analysts after the company posted generally positive fiscal Q4 results that nevertheless included a sharp decline in TV numbers in Germany, Read said that the company was “very happy” with its organic strategy in the UK.

He highlighted the company’s addition of 64,000 broadband customers in what is primarily a mobile market for it as evidence that “we know how to sell fixed in this marketplace” and pointed to a respectable financial performance in the UK where Vodafone saw its top line grow by 1.2% and EBITDA grow by 10%.

Read also indicated that Vodafone plans to look once again at developing a TV offering for the UK market to boost its consumer play. Plans for a UK TV offering were put on hold some years ago as Vodafone focused on other priorities.

Read said that the UK is “an OTT market” where Netflix has penetration of around 45%, compared with about a third of that in Germany, where Vodafone is the leading cable operator. He said that TV ARPU was also high in the UK, “which offers an opportunity around cord-cutting”.

Read said that Vodafone could take advantage of BT’s need for an anchor wholesale client to justify its fibre build plans, which are likely to involve building into Virgin Media’s territory, while fibre wholesale outfit CityFibre is also in need of clients.

“We have access to wholesale so we can offer converged products,” said Read.

Allowing the inference to be drawn that Vodafone will not attempt to counter-bid against Telefónica to partner with Liberty Global in the UK market, he said that “Liberty and O2 will be going through a very complex integration over many years in the consumer space”.