The German arm of
Vodafone Group Public Limited Company
) inked a service agreement with the nation's communication major
Deutsche Telekom. None of the companies disclosed the financial
terms of the deal - that is pending approval of the Federal
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Per the deal, Vodafone will offer high-speed broadband and
television services via fixed-line across Germany, utilizing
partner Deutsche Telekom's VDSL based modified "Layer 3"
(IP-based) bitstream network. This will enable customers to
receive connection speeds of up to 50 Mbps along with Vodafone's
on-demand and broadcast IPTV services. The speed is expected to
reach up to 100 Mbps, after Deutsche Telekom rolls out vectoring
The agreement calls for a more technologically advanced "Layer 2"
(ethernet-based) bitstream product to be made accessible to
Vodafone by Deutsche Telekom from 2016. Following this upgrade,
Vodafone will be able to exercise a higher level of
differentiation and regulation over the design and transmission
of its services.
Since last year, Vodafone is concentrating on expanding its
service offerings to maximum markets in Europe. This March,
Vodafone tied up with Orange, an affiliate of
France Telecom SA
) to roll out fiber broadband services in Spain. Last year,
Vodafone took over U.K. based multinational firm Cable &
Wireless Worldwide, enhancing its product portfolio and
broadening the customer base.
However, with this deal that aims to solidify Vodafone's hold
over the German market, the talked about acquisition of the
country' largest cable network company - Kabel Deutschland
Holding AG - seems unlikely.
We believe that Vodafone displays a number of growth potentials
including significant traction in emerging markets, network base
upgrade and lucrative collaborations. The various alliances of
the company are expected not only to foster its presence in the
European telecommunication market, but also consolidate its
competitive position against players like
Liberty Global Inc.
Vodafone - which recently signed a contract with
Cisco Systems Inc.
) - currently carries a Zacks Rank #3 (Hold).