Belfast Telegraph

Vodafone's German acquisition hints at move into pay-TV sector

Vodafone looks to have triumphed in the battle for Kabel Deutschland after the German cable firm accepted a €7.7bn (£6.6bn) bid from the British mobile giant.

In a further sign of consolidation across the European telecoms industry, O2 owner Telefonica sold its Irish business, O2 Ireland for €850m (£723m) to Hutchison Whampoa, owner of rival network Three.

The two deals showed how telecom firms are urgently looking to strengthen or sell businesses because of financial and technological pressures.

Vodafone's move for Kabel Deutschland, the British firm's biggest acquisition in 13 years, is especially important as it marks a strategic shift.

The FTSE 100 giant is now set to become a 'triple play' provider, offering pay-TV and fixed-line broadband as well as mobile services.

Kabel Deutschland's decision to welcome Vodafone's 87-per-share cash bid appeared to have all but killed off the hopes of America's Liberty Global, which made an 85-per-share approach in cash and shares last week.

Vodafone's chief executive Vittorio Colao said the deal would mean "unified communications services" for German customers who "increasingly access TV, fixed and mobile broadband services from multiple devices in the home and workplace and on the move".

Vodafone will have 7.6m TV customers, 5m in broadband and 32.4m mobile users in Germany and there would be "significant potential" to cross-sell the services.

Colao played down suggestions this could mean Vodafone will move into pay-TV in Britain or other markets.

He said the rise of 'triple play' was "the beginning of a trend in consumer behaviour".

Some analysts have suggested mobile companies have fallen behind cable and pay-TV firms as customers embrace 'triple play'.

Jefferies investment bank flagged up concerns about the £6.6bn price tag for Kabel Deutschland, saying the "valuation is getting into stretch territory".

Vodafone chief financial officer Andy Halford insisted the company, which famously over-paid when it bought German operator Mannesmann for £112bn in 2000, was paying a "very fair price".

Liberty Global, which recently bought Virgin Media for £15bn, declined to comment on its next move.

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