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International
August 17, 2018
The deal expands Vodafone’s cable reach to challenge German market leader, Deutsche Telekom
Vodafone Group has agreed to acquire German and Eastern European assets from Liberty Global in a ‚¬18.4 billion (£16bn) announced today (May 9).
The firm will buy Liberty Global subsidiary Unitymedia, which is the second largest cable network in Germany, and in the Czech Republic. It also acquired central and eastern European brand UPC in Hungary and Romania.
The deal expands Vodafone’s cable reach to challenge German market leader, Deutsche Telekom in supplying more scale to Internet packages, fixed line, mobile and TV services. Vodafone and Liberty Global have been in discussion for years, and have penned a joint venture in The Netherlands two years ago.
Vodafone will pay Liberty Global ‚¬10.8bn (£9.4bn) in cash and take ‚¬7.6bn (£6.6bn) in debt.
In response to the deal, Deutsche Telekom CEO Tim Hoettges said the deal will distort competition, according to Reuters.
“I personally will fight for fair competition for our customers, to ensure that we do not face a disadvantage”, he said.
Vodafone chief executive officer Vittorio Colao said: “This transaction will create the first truly converged pan-European champion of competition.”
Not a game changing move
CCS Insight multiplay and media vice president Paolo Pescatore believes the move deal will be blocked by regulators. He said: “Vodafone now becomes a powerful rival to Deutsche Telekom in bundled services. However, we strongly believe that regulators will block or restrict the deal. Vodafone and Liberty Global have a relatively solid presence in the fixed-line and TV markets, so any move would cut the number of companies in both segments.
“This is not a game changing move. Both companies are struggling to grow in a rapidly converging world. If anything, it reinforces the importance of owning both fixed and mobile networks on the road towards 5G. The joint venture in the Netherlands’ has laid out the blueprint for both companies to come closer together”.