This Deal Could Catapult Vodafone Group plc’s Earnings Higher

Vodafone Group plc (LON: VOD) is in talks to expand its offering to customers.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

According to some City rumours, Vodafone (LSE: VOD) (NASDAQ: VOD.US) is in talks with video-streaming service Netflix to allow the company’s pay-monthly customers to stream films and television shows, complementing Vodafone’s existing media offering.

Indeed, Vodafone already offers pay-monthly customers a choice of free Spotify access, or use of the Sky Sports Mobile app, although both of which are only free for the first six months. It is thought that Vodafone’s customers would only be able to access Netflix content for a short period as well. 

vodafoneCustomers and Vodafone will benefit

Still, a deal with Netflix would be great news for both Vodafone and the company’s customers. Specifically, a deal would transform Vodafone into a one-stop shop for customers who want to access applications, entertainment and files on mobile connections.

What’s more, as customers watch Netflix content on their mobile devices it’s likely that they will demand more data from Vodafone’s network.

Data contracts are a highly lucrative for Vodafone and the company is seeking to increase the number of customers who sign up for hefty data contacts to offset declining voice and text revenues. It is likely that a deal with Netflix will boost the demand for data contracts. 

Further, an agreement with Netflix would complement Vodafone’s recent collection of European acquisitions nicely. 

Could be part of something bigger

However, this potential agreement with Netflix could be part of a bigger plan. You see, there has been much talk recently of a merger between Vodafone and one of the UK’s larger pay-tv companies, specifically, BT or BSkyB.

A deal of this kind would make Vodafone one of the largest pay-tv providers in Europe with customers across the continent.

And this is why a deal with Netflix appears to be part Vodafone’s long-term growth plan as the company would be able to offer subscribers Netflix continent as standard across the newly acquired pat-tv network. Additionally, Netflix would be able to benefit as the company would be able to drive growth off Vodafone’s pay-tv customer base. 

Foolish summary

All in all then, a deal between Vodafone and Netflix would be great news for both companies. Moreover, it is likely that Vodafone will report a rise in customer numbers as a result. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert does not own any share mentioned within this article. The Motley Fool has recommended shares in BSkyB.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »