April 4, 2013 / 12:30 PM / 5 years ago

Vodafone, Deutsche Telekom in new wholesale talks-source

LONDON, April 4 (Reuters) - Vodafone is in talks with Deutsche Telekom to agree a wholesale deal that would enable the British group to offer its German customers superfast broadband and a TV service, a person familiar with the situation said.

Vodafone, traditionally a mobile-only company which has to rent fixed lines in wholesale deals to offer broadband in some markets, has come under pressure from investors and analysts to show how it can compete with cable TV groups and telecom firms who can lure customers with a combined offer for mobile, fixed calls, broadband and TV.

The combined offer, particularly from cable operators, has proved increasingly attractive as consumers watch more programming on TV, laptops and smartphones.

Some investors had feared the trend would force Vodafone to go on a Europe-wide spending spree to buy fixed-line assets, and sources told Reuters in February that it was weighing a 10-billion-euro bid for cable operator Kabel Deutschland .

But the fixed-line wholesale talks in Germany and a plan announced in March to build a fibre broadband network with France Telecom in Spain shows that Vodafone has options other than acquisitions.

Vodafone declined to comment and Deutsche Telekom was not immediately available to comment.

Some analysts have said that the approach to Kabel Deutschland could have been designed to negotiate better wholesale terms from Deutsche Telekom.

The person familiar with the situation, talking on condition of anonymity, said Vodafone Germany and Deutsche had opened talks in December about agreeing a new wholesale deal for so-called VDSL bitstream technology. Vodafone has 34 million customers in Germany.

VDSL helps to increase speeds from a traditional copper network and the talks are about access to this and developments currently being worked on by Deutsche, called VDSL on a layer 2 basis and vectoring, which will provide even faster speeds of up to 100 Mbits per second and ensure the smooth delivery of TV over the internet.

The 100 Mbits per second compares to current levels of around 16 Mbits.

The source said discussions had been slow but were due to resume soon and that Vodafone did not rule out having to resort to the local regulator to seek help if they could not agree a price that works for both sides.

Vodafone already owns some fixed-line assets in Europe but it only has quad-play services with TV, broadband and fixed and mobile calls in Portugal.

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