Vodafone moves into European broadband market

Vodafone is spending £537 million on expanding its broadband business into continental Europe by taking over Swedish phone firm Tele2’s fixed line telecommunications businesses in Italy and Spain, giving it 3.15 million new customers.

Both markets are vital for Vodafone in Europe and the deal will provide the company with the expertise and infrastructure it requires to cash in on broadband the access of which is expanding significantly.

By the end of 2007, 44% of Italian households will have broadband, up from 30% two years ago. The figure for Spain will 57% by the end of 2007, compared with 33% 2 years ago.

Vodafone will benefit from cost synergies arising from the use of existing network operations and infrastructure. The organisation also plans to cross-sell its existing products to customers in both countries.

At the beginning of 2007, Arun Sarin, chief executive, sealed a major victory with the £5.5 billion purchase of Hutchison Essar in India and has also been making moves in Turkey and South Africa. The chief executive said that the Tele2 acquisition is consistent with their strategy of meeting their customers’ total communications requirements.

Vodafone’s shares have risen by 35% over the last 12 months, a good performance when compared with the FTSE 100’s gain of a modest 10% over the same period.

Vodafone is headquartered in Newbury, Berkshire, and is the largest telecommunications company in the world by turnover. As at July 2007, the mobile network operator had a market value of £84.7 billion.

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