Vodafone is reportedly in discussions with Deutsche Telekom to enable the operator to complement its mobile service in Germany with high-speed broadband and TV services.
The Reuters report says talks are about a wholesale agreement allowing Vodafone to access Deutsche Telekom’s high-speed VDSL network.
Vodafone, under investor pressure to step up its efforts in the “quad-play” space – and so compete better against fixed-line incumbents with mobile operations, as well as cable operators with MVNO deals – was reported earlier to be weighing up a EUR10 billion bid for Kabel Deutschland, a German cable operator.
An unnamed source cited in the report said discussions have been slow, but Vodafone – said the source – doesn’t rule out asking the regulator for help if a mutually agreeable price can’t be agreed.
Frustrated by its attempts to gain timely wholesale access to Telefonica’s fibre-optic network in Spain, Vodafone and France Telecom are jointly investing EUR1 billion in rolling out a fibre-to-the-home network. The aim is to reach 800,000 households and workplaces by March 2014, extending to six million by September 2017.
Vodafone already owns fixed-line assets in Germany through its Arcor subsidiary, but its German fixed-line unit uses older and slower DSL technology than Deutsche Telekom’s.
There are arguably strong business case incentives for traditional standalone mobile operators – like Vodafone – to get more heavily involved in quad-play.
Taking into account that fibre access consumers tend to be in the higher ARPU bracket – and assuming lower churn rates from fixed and mobile bundling – Bernstein Research works out that operators could discount their quad-play packages by around 25 per cent to the standalone ARPU and still see an incremental customer lifetime value.