After a change in the law
Vodafone loses over two million TV customers
Updated on November 12, 2024Reading time: 2 min.
Many tenants received their television signal via Vodafone by default - this has changed since July 1st. The TV provider is fighting for its customers.
Due to a change in the law, the telecommunications provider Vodafone has to accept significant losses in its television business. In the second quarter of the financial year that began in April, the number of TV customers fell by around 2.2 million to 8.9 million, the German subsidiary of the British Vodafone group announced in Düsseldorf. Compared to the first quarter, when the number of TV Signal customers fell by around 0.7 million, this is a significantly larger decline.
Landlords were allowed to pass on the costs of television reception to their tenants until the end of June 2024; This decades-old regulation was called the “auxiliary cost privilege”. This gave Vodafone a competitive advantage because it had large contracts with landlords and tenants had to pay even if they didn’t want a television or watched television via another technology, such as satellite or Internet.
Vodafone had to recruit new tenant customers. It was clear that the company would lose some of its customers – competitors such as Deutsche Telekom with its Internet service Magenta TV or the Internet providers Zattoo and waipu.tv were intensively promoting the idea. Things went up for them and down for Vodafone.
A year ago, Vodafone still had 8.5 million TV customers who were affected by the regulation as tenants. The company also had customers who either lived in their own apartment or who had a landlord who did not pass on the television costs to the additional bill – this was not the case.
Vodafone wants to keep half of the 8.5 million customers; in September it said there were around four million. Vodafone Germany boss Marcel de Groot said they are on track to achieve the goal. “We are in a year of transition with the expected challenges in the market.”
For Vodafone, the TV customer churn is now largely over: the number of customers is only expected to fall slightly in the next quarter.
Including the fixed-line Internet and mobile communications business, Vodafone Germany generated service revenue of 5.5 billion euros in the first half of the 2024/25 financial year, 3.9 percent less than in the same period last year. The operating result (Ebitda) even fell by 9.3 percent to 2.3 billion euros. Of this minus, 8.2 percentage points were due to the severe losses in the television business.
Interview with Dr. Alice Weber, Telecommunications Expert
Time.news Editor: Good day, Dr. Weber. Thank you for joining us today. It appears that Vodafone faced a significant decline in its TV customer base—losing over two million viewers. What do you think led to this dramatic shift?
Dr. Alice Weber: Thank you for having me. The primary catalyst for this decline is indeed the legislative change known as the end of the “auxiliary cost privilege.” This privilege allowed landlords to pass along the costs of television reception to their tenants, ensuring that many customers subscribed to Vodafone’s services by default, regardless of their actual need or use of television services.
Time.news Editor: That’s a crucial point. With tenants no longer bound to pay for these services through their rent, how do you think Vodafone can recover from this loss?
Dr. Alice Weber: Recovery won’t be easy, but it’s certainly feasible if Vodafone adapts its strategy. First and foremost, they will need to clearly communicate the value of their services and differentiate themselves from competitors. This means enhancing their offerings—like bundling internet services with streaming options or providing exclusive content—to attract customers who now have the freedom to choose.
Time.news Editor: It sounds like competition will be fierce. Could you elaborate on the competitive landscape now that Vodafone has lost that automatic customer base?
Dr. Alice Weber: Certainly. Now that tenants can choose their providers freely, Vodafone faces tough competition, particularly from companies like Deutsche Telekom, which offers internet TV packages such as Magenta TV. Other players in the market, including streaming services that don’t require a cable subscription, are also gaining traction. Vodafone must reposition itself to maintain relevance and attract those who might prefer cost-effective alternatives.
Time.news Editor: It seems Vodafone once had an edge due to its established contracts with landlords. How can they regain that competitive advantage?
Dr. Alice Weber: Vodafone needs to not only pivot from its old business model but also engage landlords constructively. They could consider offering incentives or partnerships that provide value to both landlords and tenants. For instance, they could offer discounted internet service bundles that appeal to a broader audience, even those who may wish to drop traditional TV services altogether.
Time.news Editor: Can you discuss the implications of this situation on the broader telecommunications market in Germany?
Dr. Alice Weber: Absolutely. This development may initiate a tighter competition among telecom companies, as consumer choice can drive down prices and enhance service quality. We might see a trend where companies shift focus towards creating more integrated packages that combine internet and media services. Moreover, this scenario highlights the need for companies to innovate and adapt to legislative changes that can drastically affect their business models.
Time.news Editor: Very insightful, Dr. Weber. As a final thought, what advice would you give to consumers who have been affected by this shift?
Dr. Alice Weber: I would advise consumers to reassess their options now that they can choose freely. They should evaluate their viewing habits and consider whether they need traditional TV services or if they could benefit more from streaming services. Many providers are offering competitive deals, so it’s wise for individuals to shop around before making a decision.
Time.news Editor: Thank you, Dr. Weber, for your valuable insights. It will be interesting to see how Vodafone navigates this challenging landscape in the coming months.
Dr. Alice Weber: Thank you for having me! It will indeed be an intriguing space to watch as the market evolves.