UK Edition
Vodafone wastes millions on thwarted pay-TV ambitions
Vodafone's UK arm has wasted millions of pounds on pay-TV channel contracts that it is now seeking to escape, in the latest sign of the telecoms giant's challenges in its home market.
Sources at multiple broadcasters said Vodafone is seeking to exit deals it entered into as it prepared to launch its own internet-based TV service last year.
The operator has already paid millions to channel providers on what are typically three-year contracts and now faces penalty payments to break the agreements early.
The move is a signal that Vodafone has no intention of entering the pay-TV field in the foreseeable future.
Vittorio Colao, the company's chief executive, said in February that while the group's plans had been paused, it was ready to launch "within weeks" if a decision was made.
Without pay-TV channel deals with major broadcasters such as ITV, Channel 4, Sky, UKTV and Viacom, Vodafone would face lengthy renegotiations if it changed tack again.
The decision to abandon pay-TV leaves Vodafone's domestic arm without one of the central planks of the strategy it has pursued in its other major European markets. Mr Colao has been building bundles of "converged" mobile, broadband and pay-TV in Germany, Spain, Italy and elsewhere.
Vodafone sources said attempts to exit channel contracts early reflected a recognition of the company's weakness in the UK broadband market. While in other European countries it is a major player with millions of homes connected to its network, at home it is a minnow with fewer than 200,000 subscribers, having entered the fray only two years ago.
Its struggles have fuelled speculation that Vodafone will seek a joint-venture with the cable operator Virgin Media, or a full-scale merger with Virgin Media's parent company Liberty Global.
Vodafone declined to comment.