Vodafone invests in broadband as shareholder calls for merger

VODAFONE said yesterday it would invest hundreds of millions of pounds in building fibre broadband networks in Spain, as the company attempts to sign up more customers by offering bundled mobile and internet deals.

The FTSE 100 firm is teaming up with Orange, a division of France Telecom, to spend around €1bn (£867m) on bringing high-speed connections to 6m homes.

Vodafone has suffered in markets such as Spain and Italy as operators including O2 owner Telefonica offer so-called “quad-play” offerings, combining mobile, landline, broadband and TV contracts.

Chief executive Vittorio Colao outlined a strategy of investing more in new services at last month’s Mobile World Congress in Barcelona, leading to speculation that he would have to sell Vodafone’s 45 per cent stake in US mobile network Verizon Wireless (VZW) to fund the plan.

Majority VZW shareholder Verizon Communications has recently repeated intentions to buy the stake.

Yesterday, hedge fund manager Bronte Capital said that Vodafone selling its VZW stake would be “absurd” but instead called for the company to merge with Verizon, a possibility that the two parties have reportedly discussed.

Bronte Capital – a Vodafone shareholder – said selling the VZW stake would cost the firm billions in taxes and that the best solution would be for Vodafone to sell itself to Verizon, in what would be the biggest merger of all time.