British telco Vodafone has announced its intention to buy Germany’s largest cable TV company, Kabel Deutschland, for €7.7 billion.

Kabel has 5 million broadband customers in Germany, and nearly 8 million cable TV customers. Vodafone is already the second largest mobile telco in Germany with 32.4 million customers.

The acquisition will be Vodafone's first foray into the European cable TV market, and willl allow the mobile operator to offer "quad-play" bundles that include broadband, cable TV, mobile and fixed-line telephony services.

Vodafone may still face a counter offier from Libery Global, the US-owned cable TV giant which acquired Virgin Media last year, which previously bid slightly less to acquire Kabel Deutschland.

According to figures from analyst firm Ovum, Vodafone is hoping to tap into sources of additional revenue following the saturation of the mobile market where prices have been on a steady downward trend. Ovum expects mobile telecoms revenues in Germany to fall by a compound annual growth rate of 1% between 2013 and 2018, whereas revenues from the cable broadband market will grow by 4% in the same period.

Emeka Obiodu, principal analyst in Ovum’s industry, communications and broadband practice, said that the deal reflects the “precarious” situation of Europe’s telcos. 

“The deal … is confirmation that Vodafone’s domestic European market is sickly and requires a good dose of medicine to jolt it back to life,” said Obiodu.

It also demonstrates Vodafone's pragmatism in moving beyond its traditional offerings, said Obidu. “The implication is that if Vodafone becomes Germany’s largest pay-TV provider, why would it not want to do the same in the UK, Spain, Italy or Netherlands? Watch this space."