Vodafone Deutschland targets tenants with new offer to head off threat from law change

Vodafone Deutschland is gearing up for the change in the law that will prevent German housing associations from bundling TV services with rental contracts by launching a new low-cost package – TV Connect Start – aimed directly at tenants.

Marcel de Groot

About a third of Germany’s households will need to sign a new TV contract in the course of next year as a result of the change.

The price of the new offering will vary depending on cooperation agreements between landlords and Vodafone, but it will be priced at between €8-€10, slightly higher than the current range of between €7 and €9.

Vodafone cited a survey conducted on its behalf by Civey that found that over half of tenants for whom cable television is billed as an additional rental cost still want to receive cable TV in five years’  time.

Around 31% of those surveyed are undecided, while 14% want to do without cable television in the future or think this is likely. The strongest adherents of cable TV are 40-49 year olds at 68%., followed by those over 65, at 60%.

Those in favour of staying with cable cited the lack of need for a separate receiver and reliable reception and picture quality, as well as fast channel-changing times.

The package will comprise 97 channels including 28 in HD as well as regional and foreign-language channels and over 80 radio services.

“Our ‘basic TV service’ is suitable for all loyal television purists for whom their usual channels are more important than streaming services or internet television. Nobody has to reconnect cables, install additional devices, use a second remote control or rearrange channels. With cable TV, everything stays the same,” said Marcel de Groot, managing director for private customers at Vodafone.

“It’s worth asking your landlord. With the agreement, cable television continues to cost most tenants less than €10 a month. Cable television will therefore remain attractively priced in the future – despite the increased administrative costs, the costs for tenants will only increase slightly.”

Declining TV base

Vodafone is gearing up for the big changes to come next year at a time when its TV base in Germany has been declining sharply. In its last quarterly results, the operator reported the loss of 120,000 TV customers in the three months to June, leaving it with 12.64 million TV subscribers.

Speaking to analysts at the time, Vodafone CEO Margherita Della Valle said that the €800 million in revenue likely to be lost from the change in TV law had a high margin of 80-90%, meaning there will be an impact on the bottom line. However, she said that there was no immediate connection between losing a TV customer and losing broadband customers, because TV was billed with the rental cost, while broadband was billed direct from Vodafone.

On whether Vodafone could retain TV customers in the MDU market, she said that big housing associations tend to change contracts in January, meaning that trials of managing transitions had been limited to date. She said in one trial Vodafone had secured 65% penetration of its previous base. A second larger trial had delivered lower penetration in its initial phase, she said, noting this had increased more recently but not to the 65% level, while a third smaller trial using different marketing techniques had delivered over 60%.