Voda­fone chief seeks me­dia part­ners to tackle slow­down

The Pak Banker - - Front Page -

LON­DON

Voda­fone's U.S. ven­ture Ver­i­zon Wire­less struck a deal this year to sell mo­bile-phone pack­ages bun­dled with fixed-line, TV and Web of­fer­ings of ca­ble op­er­a­tor Com­cast Corp. (CMCSA) in each other's stores. Vit­to­rio Co­lao, Voda­fone's chief ex­ec­u­tive of­fi­cer, wants to bring that kind of part­ner­ship to Europe, even if that means he'll have to sign sep­a­rate agree­ments in a dozen mar­kets on the cul­tur­ally and po­lit­i­cally frag­mented con­ti­nent.

"Can I have the equiv­a­lent of a Com­cast-Ver­i­zon re­la­tion­ship in Europe?" Co­lao said over cof­fee at his com­pany's Lon­don of­fices in Septem­ber. "Prob­a­bly, but there will be lots of these types of re­la­tion­ships." The push to find new Euro­pean cus­tomers is of para­mount im­por­tance for the 51-year-old as Voda­fone gen­er­ates more than twothirds of rev­enue in a re­gion that's strug­gling with high sov­er­eign debt and slow eco­nomic growth. Europe may have caused Voda­fone's ser­vice rev­enue to con­tract 0.7 per­cent in the fis­cal sec­ond quar­ter that ended in Septem­ber, ac­cord­ing to data com­piled by Bloomberg.

That would be the first de­cline in 10 quar­ters for the New­bury, Eng­land-based com­pany, which is sched­uled to re­port earn­ings to­mor­row. The fig­ure in­cludes sales from voice, data, mes­sag­ing and broad­band ser­vices, and ex­cludes the im­pact of cur­rency swings and merger and ac­qui­si­tions.

Voda­fone's African busi­ness, Vo­da­com Group Ltd. (VOD), said to­day its first-half profit rose 22 per­cent as the com­pany ex­panded be­yond South Africa.

Shares of Voda­fone climbed 0.2 per­cent to 167.95 pence in Lon­don trad­ing at 8:32 a.m. The shares have lost 6.3 per­cent this year through Nov. 9, com­pared with a 9.8 per­cent de­cline by the 23-com­pany Bloomberg Europe Telecom­mu­ni­ca­tion Ser­vices In­dex.

The world's sec­ond-largest mo­bile-phone com­pany, trail­ing China Mo­bile Ltd. (941) in rev­enue, re­ported a 1.1 per­cent de­cline in or­ganic ser­vice rev­enue for Europe in the year through March 2012, while sales grew 8 per­cent in Asia, Africa and the Mid­dle East and 7.3 per­cent at Ver­i­zon Wire­less, in which Voda­fone owns 45 per­cent.

The agree­ment with Com­cast al­lows Ver­i­zon to of­fer cus­tomers In­ter­net ac­cess across the U.S. with­out hav­ing to ex­pand its own fiber­based ser­vice, which cost the com­pany $23 bil­lion over seven years to build. While Ver­i­zon sells its own TV and high-speed In­ter­net ser­vices in some re­gions of the U.S., there's only a 15 per­cent over­lap with the ter­ri­tory of Com­cast, the coun­try's big­gest ca­ble com­pany. The deal has turned a po­ten­tial ad­ver­sary of Voda­fone into a part­ner across the U.S. and a repli­ca­tion in Europe would make sense, says Robin Bienen­stock, an an­a­lyst at San­ford C Bern­stein in Lon­don.

Phone and broad­band com­pa­nies could ben­e­fit from dis­tri­bu­tion agree­ments with me­dia com­pa­nies as cus­tomers in­creas­ingly de­mand ac­cess to their fa­vorite mag­a­zines, movies and tele­vi­sion shows on mo­bile de­vices.

Voda­fone is in talks to repli­cate a con­tent deal it has in Italy -- where it dis­trib­utes the La Repub­blica news­pa­per on a mo­bile plat­form -- in the U.K. mar­ket, Co­lao said.

France Tele­com SA (FTE) part­nered with each of the lo­cal units of RTL Group SA, Europe's big­gest broad­caster with 47 chan­nels in nine coun­tries, in or­der to win the rights to dis­trib­ute the Groupe M6 TV chan­nel in France and three other chan­nels in Bel­gium.

"Peo­ple in Ger­many want to see the Ger­man ver­sion of the Idol se­ries, not the U.K. one," said Oliver Fahlbusch, a spokesman for RTL, whose Fre­mantleMe­dia con­tent-pro­duc­tion arm has pro­duced hit shows such as "The X Fac­tor" and "Good Times, Bad Times."

BT Group Plc this year ac­quired rights for top-flight English soc­cer and rugby matches, which were tra­di­tion­ally the pre­serve of pay-TV op­er­a­tors, and is build­ing its own tele­vi­sion chan­nel to sell more broad­band sub­scrip­tions. Pur­chas­ing con­tent is a risky step for phone com­pa­nies as they don't have ex­pe­ri­ence in run­ning me­dia busi­nesses, said IHS Screen Di­gest an­a­lyst Tim West­cott.

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