Vodafone’s march into European cable will only make sense in countries where they already have operations, according to Michiel Strater, managing director, ING Commercial Banking.
At the same time, the telco would have to take care it did not become too dominant in a particular territory and attract the attention of regulators. It therefore made sense to look at markets such as Spain and Italy, said Strater, taking part in the CEO panel today at the CTAM Europe EuroSummit.
Strater said that incumbent telcos were selling non-core activities to improve their balance sheets. Cable companies are currently trying to establish cross border mergers and acquisitions, he said. Mobile operators were beginning to reduce in numbers.
Strater said telecom operators were successfully raising finance for mergers and acquisitions. “If you look at cable companies we are comfortable that they can keep their cash flows at the level they are today,” at least in the medium term, he said. “However, they need to keep reinventing themselves and spend at least 20% of revenues on R&D and upgrading your services.”