Vodafone share price: Company mulls acquisition of Tesco’s Blinkbox

Vodafone Group Plc (LON:VOD), the world’s second-largest mobile carrier, is considering buying Tesco Plc’s (LON:TSCO) streaming service Blinkbox, according to reports in the media.

The Telegraph reported on Saturday that the company was in detailed discussions over the acquisition of the service and that other interested parties had withdrawn from the bidding. The newspaper cited an unnamed soured close to the talks, according to whom the two firms were close to an agreement. However, other sources said that there was no certainty yet, The Telegraph noted.

Separately, the Financial Times also reported Vodafone’s interest in the loss-making on-demand video business. The FT cited an unnamed source, who said that the mobile phone firm had held “early discussions” with Tesco over an acquisition of the service, but added that no final offer had been made.

Vodafone and Tesco have declined to comment on the matter.

In today’s trading, Vodafone shares were 2.2 percent lower at 228.90p as of 08:20 UTC.

Low price tag

Vodafone is looking for ways to bolster its planned push into pay-TV and home broadband, a defensive move aimed at protecting the company’s mobile business from rivals, including BT Group Plc (LON:BT.A).

It has been reported that Vodafone is in talks to base its forthcoming TV service on Sky Plc’s (LON:SKY) NowTV platform. An acquisition of Blinkbox could be a significant boon for Vodafone, mainly due to the business’ well-developed relationships with content rights holders.

The Telegraph quoted an unnamed source, as observing: “Vodafone is basically starting from scratch in content. This will give them a big leg-up.” The source continued: “Blinkbox’s market positioning also suits them. It focuses on new films that will be attractive to the premium customers that Vodafone targets.”

Meanwhile, the fact that the unit is losing money means that Vodafone may acquire the unit cheaply, as Tesco is looking to dispose of non-core businesses quickly. The retailer is currently reviewing all aspects of its business after in September it discovered a £264-million black hole in its reported profits.

Following the discovery, Blinkbox was identified as one of the units Tesco would be looking to sell or close, with the firm’s new chief executive officer Dave Lewis calling it a ‘distraction’.

Analysts on Vodafone

According to the Financial Times, the 24 analysts offering 12 month price targets for Vodafone have a median target of 235.00p, with a high estimate of 270.00p and a low estimate of 130.00p.

As of November 29, 2014, the consensus forecast amongst 55 polled investment analysts covering Vodafone suggests that investors should hold their position in the company.

The same consensus forecast has been maintained since the sentiment of investment analysts deteriorated on November 19, 2014, the FT notes.