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Vodafone's big spend challenges rivals

Tuesday, November 12, 2013 - 01:40

Nov. 12 - Britain's Vodafone will ramp up investment in its network, spending 7 billion pounds to put it ahead of rivals and reverse a record decline in revenues dragged down by problems in Europe. Hayley Platt reports.

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It made $130 billion by selling its U.S. arm to Verizon. Now Vodafone is going shopping with some of the cash. It plans to spend 7 billion pounds - more than expected - increasing the speed and capacity of its networks. £3 billion of that will be for Europe and £1.5 billion for emerging markets. Some believe the Verizon deal left the world's largest mobile operator a possible target for U.S. giant AT&T. But Josh Raymond from City Index says that won't happen. SOUNDBITE: Josh Raymond, Market Strategist, City Index, saying (English): "I think they'll use those funds to acquire strategic investments to help to boost its attractiveness and also boost the innovation of it's products. So I think that's the step that Vodafone should look at." The announcement came as Vodafone reported a record drop in quarterly revenue. It blamed weak trading in Europe for the near 5 percent fall. It was well below the previous quarter's 3.5 percent drop but shares rose slightly. Pierre Briancon is from Reuters Breakingviews. SOUNDBITE: Pierre Briancon, European Editor, Reuters Breakingviews, saying (English): "It's a good decision , it's something they should do to take advantage, remember the £7 billion comes on top of the existing capex programme, you're looking at a company that will invest £20 billion in the next two years to modernise its infrastructure networks etc and allowing it to take the European recovery." A quality network is increasingly important as the number of smartphone and tablet users grows. Many now expect Vodafone's strongest rivals - Telefonica, Deutsche Telecom and Orange - to follow suit. But that could be a problem for smaller competitors who don't have such healthy cash reserves.

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Vodafone's big spend challenges rivals

Tuesday, November 12, 2013 - 01:40