What a pity Vodafone didn't decide three years ago that European cable assets were the things to own. In 2010 shares in Kabel Deutschland were trading at €25. Now Vodafone may have to pay €85, or more than €7bn, to bag its prey.
Back then, of course, cable wasn't seen as a must-have item for large mobile operators. A rethink has followed consumers' enthusiasm for so-called quad-play deals – or bundled fixed-line, broadband, TV and mobile offers. This development has presented Vodafone with a strategic headache. As Bernstein's analyst put it a while back, it must "choose its poison" in many parts of Europe – either suffer a squeeze on its business or get its hands on some cable capacity.
Vittorio Colao, Vodafone's chief executive, has been deliberately vague about his response. In some markets, he has said, it will make sense to buy cable assets; in others Vodafone will build and invest; in yet others it may rent.
The strange twist, though, is that Vodafone already has a deal to rent fibre capacity in Germany – it was signed a few weeks ago with Deutsche Telekom. So why the takeover approach to Kabel? And, if Vodafone feels the need to be both a buyer and renter, is its cable adventure about to become very expensive?
There are no clear answers at this stage. It may be that a Kabel takeover would allow the Telekom arrangement to be downgraded – Vodafone might, for example, use Kabel's fibre network for big cities and Telekom elsewhere. But, at the moment, the picture is confused.
Colao, as his fans always argue, takes a robustly disciplined approach to deal-doing, at least compared to some of his predecessors at Vodafone. Fair enough, but the eventual cost of filling the European cable hole is still a very big unanswered question. It's a good thing Vodafone investors are busy salivating over their possible payday (one day) from the 45% holding in Verizon in the US. Without that distraction, the European cable issue would look more worrying.
