It was only a few weeks back that we were analyzing what appeared to be the imminent (although at the time only rumored) acquisition of Ya.com, the Spanish ISP by Vodafone.
But the company last week was actually acquired by rival France Telecom through its Orange subsidiary, making it clear just how much venom is going into the acquisition of physical fixed line internet businesses by the large mobile incumbents.
Orange picked of the Deutsche Telekom owned ISP for €320 million, some $426 million. When the story first broke Vodafone was said to be paying more, around €400 million ($538 million) for an ISP with just 400,000 broadband Internet customers, and it is now thought that the French deal was preferable to the Vodafone cash because it will involve Orange swapping assets and Orange Netherlands local newspapers are suggesting will become part of Deutsche Telecom in a part exchange including Ya.com.
Either way we can take it that the price level for captive ISP accounts has just gone up since recent broadband ISP deals such as those where Neuf Cegetel bought Deutsche Telekom’s French Club Internet unit and when it bought AOL France valued each broadband customer at $800, and in this deal it prices each Ya customer at $1,065
This leaves Vodafone will no fixed line business in Spain with which to launch an IPTV and potential quadruple play. Vodafone has built up its fixed line stakes in all of the other large European markets and has its own German Arcor unit, access to 2 million plus broadband lines in France where it’s mobile unit SFR, owned jointly with Vivendi, owns 40% of Neuf Cegetel. Vodafone also has broadband distribution deals with both Fastweb and British Telecom in Italy and the UK. The lack of a Spanish deal now looks glaring in the Vodafone portfolio.
Vodafone is expected to imminently launch an IPTV service in Germany that will eventually be offered in a quadruple play bundle with phone, mobile and internet services. IPV suppliers around the world are very careful not to reveal that they have won contracts with Vodafone, but it is an open secret that home delivered DSL based Pay TV is coming from Vodafone in Germany sometime this year. But it is now stymied in Spain.
Once the Ya.com deal is complete Orange will leap into second place in the Spanish DSL market with over a million DSL customers, behind incumbent Telefonica which has more like 4 million.
France Telecom’s statement said that Ya.com proposes TV over ADSL, Video on Demand and flat rate telephony which will reach three quarters of its customers this year.
It looks like the deal will be done as a partial swap, with Deutsche Telekom acquiring Orange in the Netherlands for around €1.3 billion.