Bloomberg News

Vodafone Expands in German TV to Challenge Deutsche Telekom

June 16, 2011

(Updates with share price in fifth paragraph.)

June 16 (Bloomberg) -- Vodafone Group Plc, the world’s largest mobile-phone operator, will focus on building television customer numbers in Germany, its biggest market by revenue, rather than profit for the service as it competes for viewers with Deutsche Telekom AG and cable network providers.

“It’s more important initially that TV gets really big than that we make a lot of money from it,” said Friedrich Joussen, who heads Vodafone’s German operations. The Vodafone TV service, which started in the country in February, has about 25,000 users and is adding about 300 to 400 new subscriptions a day, with more than 1,000 “easily achievable,” he said at a briefing with reporters in Dusseldorf.

Vodafone’s German unit generated 20 percent of total earnings before interest, taxes, depreciation and amortization and 17 percent of sales in the 12 months through March. The division is rolling out a fourth-generation wireless network to support increasing demand for data traffic as more people use smartphones. It’s also trying to lure and retain customers by packaging TV with other services.

Vodafone TV uses cable, satellite and Internet infrastructure and its marketing will start “in earnest” in the fiscal third quarter, Joussen said. The Newbury, England- based company has to be quick to avoid falling behind Bonn-based Deutsche Telekom, which is starting to offer satellite access to its Internet-based Entertain TV product, he said.

Vodafone fell 0.9 percent to 158.30 pence at 10:32 a.m. in London trading.

Deutsche Telekom Growth

Deutsche Telekom increased subscriptions for its TV service in Germany by more than 100,000 to 1.3 million in the quarter ended March 31, according to a May 6 statement.

Vodafone offers a TV service packaged with a broadband connection in Germany for 34.95 euros ($49.90) a month. Deutsche Telekom bundles a TV service with broadband and unlimited fixed- line phone calls in the country for 36.32 euros, according to its website.

For wireless service, Vodafone’s average revenue per user in the country is starting to rise among contract customers as growing data and messaging revenue makes up for a decline in the traditional voice business.

--Editors: Robert Valpuesta, Simon Thiel.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net


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