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Photo: Chris Hopkins / The Guardian

Vodafone's chief executive has ruled out making a rival offer to challenge the £ 31 billion mega merger of Virgin Media and O2 in the UK, citing problems like Netflix's growing threat in the TV space.

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Vodafone had previously been considered the most likely player to combine its UK business with Virgin Media, having made previous deals with parent company Liberty Global. Last year, Liberty Global sold its cable TV assets in Eastern Europe and Germany to Vodafone for € 18 billion.

The two companies signed a joint venture agreement in the Netherlands in 2016, combining cable and mobile networks on the same model as the Virgin Media / O2 merger.

Nick Read, Vodafone's chief executive, said the company would not attempt to interrupt the agreement between Telefonica and Liberty Global, which will create a joint venture to challenge BT and Sky in the UK.

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"We remain very focused on our organic strength and we believe that the market remains structurally favorable for us," said Read, in a liaison with the media as Vodafone published results for the year through the end of March.


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"I feel that the appropriate strategy is our organic strategy to create value for all stakeholders".

Read questions raised, including long-term prospects for owners of traditional TV sets, such as Virgin Media, citing the rise of Netflix, which has more than 12 million subscribers in the UK, and the risk that consumers will "cut back" the cables "of expensive TV packages.

He also added that the nationwide launch of next generation full fiber broadband will override Virgin Media's domestic cable network, which will mean more competition to retain customers.

As previously signaled, Vodafone also paid its € 2.4 billion dividend, although many companies choose to save money to resist the impact of the coronavirus, pointing to the company's resilient business model and strong balance sheet.

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"We are supporting our many shareholders, who count on the dividend as an essential part of their revenue," he said.

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“We have a progressive dividend policy and when you look at our free cash flow generation this year…. We have a good margin for maneuver.

Vodafone also provided information on the impact of working with domestic and government blockages across Europe.

In April, Vodafone said that in Europe customer data usage increased by 15%, voice traffic increased by 40% and fixed broadband use increased by 70% in some markets. However, travel restrictions caused mobile roaming traffic to drop from 65% to 75%.

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