UK based mobile service provider Vodafone is in discussions with Deutsche Bahn and Deutsche Bank to buy their 27% stake in German fixed-line operator Arcor.
Deutsche Bahn was in negotiation for a price of 800m euros for the two stakes. However, Vodafone’s advisers are expected to negotiate at a price closer to 400m euros. Arcor is Germany’s second largest fixed-line operator after Deutsche Telekom, with more than 2.1 million broadband customers.
Arcor has recorded triple digit customer growth in the past year with a 166% growth in DSL customer base and a 103% growth in ISDN customer base. Arcor has also launched a fixed mobile convergence (FMC) service, called Dual-Phone, which allows the use of cellphone to make calls from the home DSL connection via a Wi-Fi router.
Arcor is expected to be incorporated into the Vodafone’s first major experiment with FMC. Vodafone, in its recent reorganization, decided to enter the FMC market to sustain its margins over time and avoid being sidelined in to a mobile-only niche.
After the reorganization of Arcor in to its business, Vodafone can deliver wireless-only quad play services. The company can also offer services such as fixed and mobile broadband. It has already introduced ‘homezone’, a DSL service with VoIP, which offers flat rate voice calls through 3G spectrum.
Vodafone had plans to sell Arcor, which it gained as part of its 101bn pound acquisition of Mannes-mann in early 2000, as it thought that mobile phones would displace fixed lines. However, considering the competition that it faces from incumbent Deutsche Telekom, with its T-Mobile and T-Com units, in addition to an all-wireless FMC strategy from Telefonica’s O2 Germany, integration of Arcor’s DSL business would create a challenger to Deutsche Telekom and O2.
As wireless markets mature and converge, the offerings incorporating fixed-line and other telecoms services such as broadband internet are expected to become more popular and a mobile-only strategy may no longer be feasible.
France Telecom had bid for Amena in a plan to combine the mobile operations of Spanish Wanadoo broadband business as part of its NExT (New Experience in Telecom services) strategy and offer converged fixed mobile services under the Orange brand. France Telecom is also competing with BT in the UK through its subsidiary Orange UK’s Unik, a fixed mobile convergence service.
Source: ComputerWire daily updates