The chief executive of Vodafone warned of a “prisoner’s dilemma” as rivals’ moves to offer bundled television and broadband services put pressure on the telecoms company to buy exclusive content even though he doubts the value of doing so.
Vittorio Colao said Vodafone may be forced to bid for TV rights to keep pace with competitors in the UK and elsewhere.
BT, for example, offers TV and broadband services and could take market share from Vodafone in mobile as it bundles this in with different services.
“If someone starts bidding for content then you [might] have to yourself,” said Mr Colao at the Morgan Stanley conference in Barcelona. “Personally I have doubts that in the long run that this [exclusive content] will really create a lot of value for the platform. It tends to create lots of value for the owner.”
Vodafone plans to launch its own broadband and TV services in the UK next year, in part to counter the threat posed by BT’s impending move into the mobile market.
It has not said whether it will provide a TV service using content from other groups – as it already does in mobile partnerships with Netflix and Sky – or look to add its own exclusive content.
Vodafone has been using content offers to encourage customers to take higher priced 4G contracts and use additional data on their devices.
“Content [deals for] exclusive ownership – you have to ask yourself what is the end game,” said Mr Colao. “For a platform, you have to ask if exclusive ownership over many years is going to lead to higher cost or a real increase in value.”
This question would depend on a number of things, he added, from “how smart you can be” to regulations. He pointed to the difference between Spain, where bundled TV and telecoms offers have forced discounted prices across the market, and Germany, where similar offers have been kept at a premium.
Mr Colao said Vodafone would consider acquisitions in Italy – where the group has been linked to interest in Swisscom’s Fastweb fixed-line business and other rival groups – but only “at the right price”. The discussions between Swisscom and Vodafone have struggled in the past given differences in the valuation of the broadband provider, according to people familiar with the situation.
“It is no secret that at the right price we would be interested in getting more fixed assets,” he said. “If an opportunity arises, then we will take a look.”
Mr Colao did not rule out potential disposals of “peripheral” businesses – amid questions about whether it should sell smaller operations in Australia, Hungary and the Czech Republic – but said any deal would depend on whether there was a buyer willing to meet its price.