Vodafone Ireland is set to enter the Irish quad play market with a new TV service. Initially launching in Ireland, the rumored service will eventually make its way to the UK and Northern Ireland, with the Irish Independent reporting that the telco will begin trialing the service in the summer.
A commercial Irish launch is expected later in the year, according to the paper, with the TV offering reported to be based around a set top. This brings it squarely into contention with Ireland’s UPC (Liberty Global-owned cableco, itself planning a mobile launch), Sky (satellite) and established quad play incumbent Eircom – the former state telco.
Vodafone Ireland is also currently upgrading its fixed-line infrastructure, on the back of a joint venture with Irish utility ESB. The project will build a $515 million fiber-to-the-building network, which will pass 500,000 buildings by the end of 2018. The pair plan to offer access to the network on a wholesale basis, most likely because the European Commission’s requirements will mandate it to.
The work with ESB will see the electric company lay fiber alongside much of its electrical infrastructure, and provide gigabit speeds to customers – much like the growing municipal broadband movement in the US. Given that Ireland has 1.65 million homes, Sky holds upwards of 600,000 TV homes, and UPC has another 458,000 customers as of July last year, the Irish TV market is some 75% saturated. This doesn’t leave Vodafone with much hope on a single-play TV basis, but it will undoubtedly fare better in a quad-play offering.
Vodafone got its broadband foot in the door when it purchased BT Ireland’s residential subscriber base in 2009, and Vodafone was launched in Ireland off the back of Eircom’s decision to offload Eircell’s cellular assets in 2001, after Eircom was made a public company.
A spokesman for Vodafone did not endorse the reports, noting “we are currently assessing our options in relation to TV services but cannot currently share any details at this point.” But Vodafone itself has a lot of cash to spend after its sale of its Verizon stake in 2013 – for $130 billion, a deal which completed in February 2014.
Since freeing up the cash, much of which was admittedly returned to shareholders, Vodafone has been on a quiet spending spree. Persistent rumors that the company is interested in purchasing Liberty Global are given fuel by Vodafone’s decisions to buy cable assets – in the form of Spain’s Ono ($8.21 billion) and Kabel Deutschland ($8.55 billion)
Similarly, the company is investing £7 billion ($10.8 billion) on top of its usual hefty Capex program, in what it calls Project Spring, which includes £3 billion ($4.6 billion) extra in Europe to accelerate the introduction of small cells and WiFi to differentiate the Vodafone 4G network. Total network investment over the next two years including Project spring will be £19 billion ($29 billion).
These investments make substantial business sense on their own, as fixed-line assets are required to backhaul data – whether it’s from a cellular base station or a WiFi hotspot. If Vodafone pursues its quad-play ambitions, those fixed lines will form the spine of a Homespot deployment – much like the emerging Comcast system that is only a product launch away from providing a WiFi-first mobile package to rival AT&T and Verizon.
Buying up the Liberty assets would mean divesting assets in countries where combining the Vodafone and Liberty customers would break anti-competition legislation. While that could be an arduous process for the potential new company, the allure of a competitive nearly whole-European business could push Vodafone towards a deal.