European Mobile Operators Need Cable More than Cable Needs Mobile

Do mobile operators need cable TV network assets more than cable TV operators need mobile assets? Maybe, one might conclude from recent transactions.

Vodadone is nearing a purchase of Ono, the largest cable TV operator in Spain, and Vodafone earlier had purchased Kabel Deutschland, the largest German cable TV company.

Liberty Global, on the other hand, plans to create a pan-European mobile virtural network operator operation, beginning in the Netherlands, Belgium, Switzerland, Austria, and the United Kingdom, something Liberty Global has been working on for a year or more.

But there is a difference. Liberty Global thinks adding a mobile service to its triple play is a defensive move. Liberty wants to be able to match quadruple-play offers, but with a lower capital investment profile.

Vodadone sees cable TV assets as more strategic, allowing Vodafone to enter some enterprise markets it cannot do solely with mobile assets. Also, Vodafone seems prepared to acquire the network assets, not simply “renting” them wholesale.

In part, that is because the fixed network offers multiple revenue streams, not one.

Vodafone gets the consumer triple play business, plus an enterprise services business, and also can use the cable network as an extension of its mobile network, for offloading mobile traffic. That provides a number of new revenue streams and also a low-cost offload capability.

Liberty Global has preferred an asset light mobile strategy in Europe since at least 2013, when Liberty signed wholesale capacity agreements with Telefonica 02, Orange, Vodafone, and Mobistar.

Virgin Media, now owned by Liberty Global, also has had a mobile virtual network operator business in the United Kingdom.

To be sure, most larger service providers in Europe are likely to embark on new acquisition moves over the next several years, to gain scale. In that sense, all assets will be in play--fixed and mobile, cable and telco.

But cable TV assets might be more strategic for mobile service providers than mobile assets are for cable TV operators.