Economy, Sci & Tech

Vodafone Could Fall Behind Rivals

Vodafone Could Fall Behind RivalsVodafone Could Fall Behind Rivals

British mobile operator Vodafone risks being left on the sidelines as rivals converge to break free from just selling ever-cheaper data bundles and become internet companies offering combined services from phones to TV to broadband.

Vodafone expanded at breakneck speed through audacious takeovers and now has nearly half a billion mobile customers and operations in about 30 countries, yet investors worry it is not adapting quickly enough to the fast-changing landscape, Reuters reports.

Long-cherished for its dividend yield, Vodafone London shares are trading at a discount by most measures for the first time in more than three years and worries about cashflow in a cut-throat mobile market are reviving calls for a merger to transform it into a European communications powerhouse once again.

“It’s fair to say Vodafone were too slow to appreciate the direction that the market was going in terms of the need to be able to offer genuinely converged products, and to have favorable access to fixed-line networks and, ideally, to own those networks,” said one of the company’s 10 biggest shareholders.

“The longer they wait, the more time you are losing ground to others,” said the investor, who declined to be named.

 Bigger Challenges

Vodafone’s home British market epitomizes the broader challenges the company faces. Former fixed-line phone monopoly BT and satellite TV pioneer Sky have spread their wings to offer telecoms, broadband and TV bundles.

Rupert Murdoch’s Twenty-First Century Fox is also buying Sky to expand its global media empire while BT has muscled in on Sky’s turf, bidding aggressively to win the rights to broadcast top soccer matches.

In an increasingly crowded marketplace, European-focused cable firm Liberty Global, which operates in Britain as Virgin Media, also offers mobile, broadband and entertainment services in one package - and uses its own fixed-line network.

And while rivals keep offering more products - Sky launched mobile services in Britain at the end of last year - Vodafone put its long-awaited TV launch on hold in February to tackle increasing competition in its traditional product lines.

It remains to be seen whether Vodafone can catch up to its European rivals, but the company recently started to make a move to Iran with the a cooperation deal with Internet service provider HiWeb.

According to reports in Tehran, the company is looking to markets like Iran to boost overall share after falling behind rivals in traditional markets like the United Kingdom.

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