Vodafone appears to be conducting an investment push. In the Netherlands, the operator has partnered with Eurofiber to roll out FTTO, and in Germany, the company has announced plans for both IPTV and LTE. For IPTV, the operator is launching not just a set-top box, but a hybrid box from Sagemcom, which can deliver all kinds of over-the-top (OTT) content to the TV. Customers can receive traditional broadcasts by connecting their cable or satellite service to the box, and OTT content is delivered over the box's broadband connection. Spain will be the next country where Vodafone launches IPTV, while services are already available in Portugal. For LTE, Vodafone Germany is targeting national coverage by the end of 2011, although limited to data use by laptop computers.
A different issue is the recent rumours of planned divestments by Vodafone of its minority stakes, such as Poland's Polkomtel (25%), SFR in France (44%), China Mobile (3.2%) and Verizon Wireless (45%). Private equity companies are reportedly interested in Polkomtel, which could raise Vodafone around EUR 1 billion. If Vivendi wants to buy out Vodafone's share in SFR, that could be worth another EUR 7-8 billion. To further move things along, Vodafone is reportedly also looking for a new chairman. The current chairman, John Bond, has faced criticism from investors about the group's strategy and his successor could focus on selling off the minority stakes.
The developments at Vodafone could be compared with other big international operators, especially Liberty Global and Tele2. They also built up large empires only to then implement some strict portfolio management in order to free up cash. Liberty Global and Tele2 have sold a number of country operations, allowing management to focus on the remaining activities. This allowed Liberty Global to roll out Docsis 3 in its ten European markets and start a plan for mobile services in the Netherlands. Tele2 is focusing mainly on Russia, while the Netherlands also has its attention, with the recent acquisitions of a mobile spectrum licence and BBned. Vodafone looks to be making a similar shift, selling off operations where it doesn't have full control and focusing on those where it does.
Not long ago we were wondering whether there was a trend for large foreign companies to exit the Dutch market, following Easynet's sale by BSkyB. It's pleasing to see then that the Dutch business market and mobile market are still considered by the existing operators ripe for attack. Vodafone/Eurofiber are planning to roll out FTTO nationwide, and the business departments at Tele2 and Liberty Global are more important in the Netherlands than for subsidiaries in other countries.
Looking more closely at Vodafone's plans, we wonder how these fit in with the company's supposed 'infrastructure light' strategy to develop 'total communications'. If so much is being invested, that can't be called 'infrastructure light'. When it comes to passive infrastructure, Vodafone still develops exclusively mobile networks. However the company's new course is leading to increased investment in active infrastructure. The German deal with Sagemcom points to this and sets Vodafone up to establish itself on the TV market. With the box it can offer OTT content and leave the traditional broadcasting to other providers. But the advantages of investing more go further. Vodafone can expand its services portfolio, ensure better quality and increase its margins (by reducing dependence on wholesale services from the incumbent). More investing as such, where as noted the passive infrastructure is shunned, is a logical step for an operator that started with a mobile-only strategy.
