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Vodafone claims Spanish ISP in quad play push

Will it beat Orange to the punch?

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If we had to guess suppliers for such a system we would expect that - given Vodafone's long reliance on Ericsson for infrastructure and on Nokia for handsets - it would be a straight fight between these with Ericsson pushing its Kasenna developed middleware product, and Nokia-Siemens its Surpass equipment and Myrio middleware. Our tip would be that Nokia-Siemens would win such a contract because of the strength of Siemens for implementation services in Germany.

Other middleware offerings such as those from Alcatel, including Microsoft's, which is used by Deutsche Telekom, OMP and Imagenio, which is used by rival Telefonica, would all set up conflicts, while offerings from Minerva, Orca and others are from companies that Vodafone has no experience with and which are too small. Vodafone would always prefer to work with someone that has a global reach for something this critical and companies like Cisco and Motorola might also be approached.

Back to the acquisition of Ya, Vodafone is supposed to have bid €400m ($538m) for Ya.com according to Spanish newspapers, acquiring some 400,000 broadband Internet customers.

That would make the bid a huge hike in price per broadband line over recent broadband ISP deals such as those where Neuf Cegetel bought Deutsche Telekom's French Club Internet unit and when it bought AOL France. There each broadband customer was worth around $800, and in this deal it would make the Ya customers each worth around $1,300.

This could be because Spain is not such a volatile market and that monthly broadband pricing is higher, and churn lower, in Spain, but it remains a big premium on these other deals and if that price is accurate, it looks like Vodafone had to fight tooth and claw to stop rival bidders, the most prominent of which was thought to be Orange, from shutting it out of the market.

Ya.com is the second ISP subsidiary of Deutsche Telekom to go on the block. In February, Deutsche Telekom's new CEO Rene Oberman confirmed the company was in a mess and put many of the non-German assets up for sale, with the obvious exception of T-Mobile, including the French and Spanish ISP businesses, which were thought to be too small to scale.

If Vodafone decides it cannot bring a full quadruple play to market on lines which are merely leased from British Telecom and Fastweb, it has the obvious next step of trying to acquire the remaining business of Tiscali, based mostly in Italy and the UK. Tiscali has recently sold off its German and Netherlands operations to focus on the UK and Italy. Tiscali's stock market value is a mere €1bn ($1.34 billion), but if anyone came in to bid for it, its value would likely rise well above $2bn, making it expensive even for Vodafone.

Meanwhile in an unrelated announcement Vodafone has brought to market its first Vodafone branded, low-cost handsets, from Chinese partner ZTE priced at between €19 and €35 ($25 and $47), for imminent launch in Egypt, Romania, and South Africa. The Vodafone 125 has a black and white screen and the Vodafone 225 has a colour screen.

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Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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