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September 6, 2013 7:32 pm
Vodafone’s chief executive Vittorio Colao has underlined the mobile operator’s new reliance on Italy, saying that the group would dedicate “a large part” of its £6bn investment war chest to the country.
Mr Colao’s statement reflects a shift of focus at Vodafone following the sale of its $130bn stake in US operator Verizon , although some analysts noted that the Brescia-born Mr Colao was speaking to an Italian newspaper.
However, analysts also argued that, in selling its Verizon stake, Vodafone has in effect bet that the US phone market is at a peak while Europe may be near its lowest ebb. When the Verizon deal completes, Vodafone will assume full control of Vodafone Italia, making Italy its second biggest market.
“Although [Italy] is in southern Europe, it is a core asset for Vodafone,” said Iván Palacios, an analyst at Moody’s.
Vodafone has promised to invest £6bn of the Verizon sale proceeds, and must decide which countries receive the lion’s share.
Much of the investment will go to 4G networks, in the hope that faster data speeds will lure customers from other operators.
“At the moment the competition in Europe is on price, not on quality,” said Mr Palacios. “The issue is how smaller operators respond. None of them has the financial flexibility that Vodafone has.”
The UK, which is forecast to generate two-fifths of the cash that Vodafone derives from Italy, may receive less of the investment.
Guy Peddy, an analyst at Macquarie, said that Vodafone’s drive to invest in 4G was “better than trying to play catch-up in five years”.
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