Vodafone returns to top-flight football in Spain

The mobile operator on Tuesday announced it has signed an agreement with streaming platform DAZN to add La Liga football, F1 motor racing, MotoGPTM, and other sports content to its own offering.

Customers will have a choice of three DAZN plans, the most expensive of which comes in at €29.99 per month and includes 175 La Liga matches per season. The plans launch on Wednesday and are available to customers signed up to Vodafone Spain's converged offer and to those taking mobile-only plus TV.

In and of itself, this is not massive news...unless you happen to be a football-loving Vodafone Spain customer, of course. But it is noteworthy on a broader level because it marks a strategy U-turn for the telco.

In the summer of 2018 Nick Read, then CFO of Vodafone Group but due to take the top job within a matter of weeks, explained to industry watchers why the operator's Spanish business had chosen to remove top-flight football from its content offering.

"Football rights in Spain are, quite simply, uneconomic. Even if we lost every one of the 300,000 TV customers who pay for football, which we do not anticipate will be the case, we will still be financially better off," Read said, on Vodafone's results call for the quarter ending 30 June 2018, its fiscal Q1.

"We intend to focus this investment in our other commercial activities, which offer a higher rate of return, including enriching our film and series propositions, which appeal to a much broader part of the market than the 2.6 million homes, less than 10% of the total, who are willing to pay for football," Read said.

Analysts were naturally sceptical that a willingness to lose so many customers was a sensible idea, and some frantic maths ensued, but Read stuck to his guns.

"If you look at those [10% of] households, we have over the last couple of years done several promotions, Orange has done several promotions, and we've not really expanded that universe of people that are willing to pay," he said. "Then you take into account that TEF (Telefonica) has locked in, effectively, over 50% of those customers or that marketplace. So our ability to use it as a lever to attract more customers is proving very difficult."

And he went on to make all the right noises about what Vodafone would do instead of spending all that money on football: invest in networks, providing compelling commercial offers, offering premium film and TV content, and so on.

Vodafone's revenue in Spain was down in that quarter and churn was up, partly as a result of that pullback from football. Five years on, looking at the first quarter of the financial year that will draw to a close next month, Vodafone's service revenue in Spain had fallen to just over three quarters of what is was back then and the number of households it was serving with a converged fixed, mobile and TV offer had dropped to 2.2 million from 2.5 million.

That's not to say that pulling out of football content was the wrong decision, more that Vodafone clearly failed to replace it with anything truly compelling. And then, of course, it decided to sell out of Spain altogether, announcing a deal worth up to €5 billion with UK-based investment firm Zegona Communications in October.

The economics of Vodafone's deal with DAZN may well be very different than in 2018. The market certainly is. Perhaps there are now decent returns to be had from football in Spain, or more customers willing to pay for it, despite the economic pinch. The telco's new owners will surely hope so.