Vodafone has announced its biggest-ever investment programme. It is spending £19bn over the next two years on upgrading networks, mostly in Europe. Having just disposed of its stake in America’s Verizon for $82bn, it has ample cash.
The news accompanied lacklustre quarterly results, with lower revenues in Europe the key problem.
What the commentators said
Anyone with experience of unreliable mobile-phone signals across Europe and parts of the UK will appreciate why Vodafone needs to spend additional cash on improving service, said Alex Brummer in the Daily Mail. EE’s impressive 4G services demonstrate the benefits of investing in next-generation technology.
It makes sense for Vodafone to try to get ahead of “a predicted explosion” in data demand as internet usage on mobile phones grows, noted Quentin Webb on Breakingviews. The trend should favour operators with high-quality networks.
Moreover, competition has intensified of late. The advent of mobile broadband has made life easier for former telecoms monopolies and cable companies, who can combine offerings such as fixed-line telephony and TV with cheap mobile services.
If Vodafone is right in thinking that Europe is set to recover, “now is as good a time as any to press the accelerator”, said Nils Pratley in The Guardian.
However, it could be years before the investment splurge begins to show results. So you can’t blame shareholders for hoping, as continually rumoured in the past few months, that America’s AT&T will turn up with a bid.