Vodafone is to launch home broadband and TV to British customers in the first half of next year in a watershed moment as the mobile giant looks to take on Sky, BT, Virgin Media and TalkTalk by offering a complete bundle of telecom and TV services.
Shares in the FTSE-100 giant surged 5.8% to a six-month high as Vodafone also reported a strong improvement in revenue across virtually all its key European markets.
Chief executive Vittorio Colao said Vodafone would use its own fixed-line fibre broadband network, acquired with the 2012 purchase of Cable & Wireless Worldwide, as well as getting wholesale access to BT’s pipes so his customers can get home broadband.
He declined to say yet whether Vodafone has reached a deal with Sky or BT to carry its TV channels but the mobile giant already has a deal for UK customers to watch Sky Sports video clips on their phones.
Vodafone, once only a mobile carrier, has already been expanding in Germany and Spain by offering a “quad play” of services encompassing broadband, TV, home phone and mobile as customers increasingly look to buy them all from one provider more cheaply and easily.
Toby Syfret of Enders Analysis said the convergence of TV, the internet and mobile was a key factor. “It’s an inevitable trend that if you’re going to offer telecommunications, you’re going to offer video communications,” he said. “You want to be able to package it together.”
Vodafone’s entry into “quad play” comes amid a surge in activity as mobile rival EE launches in TV and broadband giant BT rolls out a mobile service – to add to its BT Sport TV operation.
Vodafone’s profits in the six months to September slumped by 73% to £406 million on sales of £19.1 billion as the group invested in upgrading its network, which meant that the group paid no corporation tax in the UK for the period.
But investors were cheered as revenues fell 1.5% in the last three months, markedly better than the 4.2% slump seen in the previous quarter.
Vodafone used its Verizon Wireless windfall to pay £365 million to top up the deficit in its pension scheme for the next five years. It also spent £100 million as part of its on-going tax settlement with HM Revenue & Customs dating back to 2010.
