Vodafone to purchase Liberty Global's European assets

It represents a step change in Europe's transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders

Vodafone in 2013 beat out Liberty Global to acquire Kabel Deutschland, Germany's largest cable operator, for $10.1 billion.

Vodafone says the transaction will help it become "the leading next-generation network owner in Europe", with a total reach of 110 million homes and businesses.

However, Vodafone chief executive Vittorio Colao said that deal "creates a strong competitor to Deutsche".

The world's second-largest mobile operator struck a deal with USA cable pioneer John Malone's Liberty after years of on-off talks to become a pan-European leader able to challenge the dominance of former monopolies such as Deutsche Telekom.

After the deal's completion, Liberty is to maintain a European presence in Belgium, Britain, Ireland, Poland, Slovakia and Switzerland.

Vodafone argued that the two businesses are "highly complimentary" in each country with "limited overlap", pointing out that Unitymedia operates its cable businesses in different parts of Germany than Vodafone.

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The deal, which remains subject to regulatory approvals, is expected to close in the middle of next year. UPC Czech and UPC Hungary are the largest cable operators in the Czech Republic and Hungary, with 1.5 and 1.8 million homes passed (33 per cent and 43 per cent of total households) respectively.

Liberty Global has focused on broadband as its core service and offering video, telephony and more in addition to it. Vodafone has been eyeing cable systems as the cable and telecom industries continue to concentrate on the quadruple play of pay TV, broadband, telephony and wireless services.

The move will see the United Kingdom telco buy businesses in Germany, Hungary, Romania and the Czech Republic and will see it bolster its cable TV, broadband internet and mobile services in the region.

German incumbent Deutsche Telekom had an IPTV and satellite TV subscriber base of 3.14 million customers in Germany at the end of 2017, and CEO Timotheus Höttges has already spoken out against a combination of Vodafone and Liberty Global's assets.

Liberty Global is getting $12.7 billion in cash out of the Vodafone deal. Vodafone is primarily active in mobile markets, whereas UPC Romania is principally a provider of cable broadband and television services. As a result, innovation and investment lag other countries in Europe, impacting customer service, next-generation product deployment and broadband speeds.

The transaction expands Vodafone's cable footprint in a challenge to Germany's incumbent, Deutsche Telekom, providing more scale to bundle Internet, phone and TV services, and follows years of on-and-off talks between Vodafone and Liberty Global. "It's time to alter market dynamics by unleashing greater investment and competition".

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