Vodafone CEO Vittorio Colao has said the company would be “happy” to take a stake in UK incumbent BT’s fixed-line infrastructure arm Openreach if it is willing to sell. He has also critiqued CK Hutchison co-managing director Canning Fok’s pledge to freeze prices for five years if the Three–O2 merger is approved, saying “I don’t know how you can commit to this”.
Vodafone (LSE:VOD) CEO Vittorio Colao has said the company would be “happy” to take a stake in UK incumbent BT’s (LSE:BT) fixed-line infrastructure arm Openreach if it is willing to sell.
Speaking during a conference call on Vodafone’s Q4 2015 results, Colao (pictured) said his company would be pleased to invest in an independent Openreach, particularly given its 28% profit margin and that it has made £4bn (US$5.82bn) more than regulator Ofcom expected.
He noted that Vodafone has invested in fixed-line infrastructure in Ireland, Spain and Portugal, but said that, in the UK, “unfortunately BT doesn’t seem to be a willing seller at the moment”.
BT closed its £12.5bn (US$17.83bn) acquisition of the country’s largest mobile operator EE in late January, creating a converged telecoms and TV service provider. The UK’s Competition and Markets Authority (CMA) approved the deal with no conditions after a 10-month review.
However, BT is still awaiting the outcome of Ofcom’s review of whether it should be allowed to keep Openreach. The watchdog’s report is expected this month.
Opponents have argued that BT’s ownership of the network is a threat to competition as rivals rely on its wholesale services, and that it is also hampering network investment.
BT CEO Gavin Patterson has contended that there is no case for forcing his company to sell Openreach and analysts tend to agree the incumbent will be allowed to keep it.
On the call, Colao said he did not have a problem with the planned £10.5bn (US$15bn) merger between rivals Three, owned by Hong Kong-based CK Hutchison, and O2, provided this and the BT-EE deal do not affect network sharing.
“I am pro-consolidation, but we need to ensure that this country has two strong independent network operators,” he said.
At present, Vodafone and 02 share networks, as do EE and Three.
Colao also questioned CK Hutchison co-managing director Canning Fok’s promise in a letter yesterday to freeze voice and data prices for five years if the Three-O2 merger is approved.
Fok – whose letter followed one written earlier in the week by Sharon White, CEO of Ofcom, outlining her opposition to the deal – also pledged to invest £5bn (US$7.3bn) in the UK businesses.
The Vodafone CEO noted that Fok has said he won’t increase prices per gigabyte, adding that, in this respect, “nobody is increasing prices”.
“I’m not sure what a price freeze means, because as far as investment goes, I don’t know how you can commit to this,” he said.
Vodafone reported total revenue of £10.3bn (US$14.93bn) for Q4 2015, down 5.5% year-on-year, which the group partly attributed to M&A and foreign exchange movements. On an organic basis, the company said service revenue was up 1.4% to £9.17bn (US$13.29bn).
On Tuesday, Vodafone confirmed reports that it is in talks with Liberty Global about a possible joint venture in the Netherlands.