trending Market Intelligence /marketintelligence/en/news-insights/trending/aypqgudkmlysfl5jxyo1fq2 content esgSubNav
In This List

Vodafone re-enters talks with Liberty Global in push for European cable deal

Blog

Broadcast deal market recap 2021

Blog

Price wars in India: Disney+ Hotstar vs. Amazon Prime Video vs. Netflix

Blog

Volume of Investment Research Reports on Inflation Increased in Q4 2021

Blog

Using ESG Analysis to Support a Sustainable Future


Vodafone re-enters talks with Liberty Global in push for European cable deal

Long-held speculation about an M&A deal between U.S.-based cable giant Liberty Global plc and British mobile operator Vodafone Group Plc has resurfaced after talks about an asset swap and even a full-blown merger faltered.

Vodafone, which owns a range of wireless broadband networks across Europe, including in the U.K., Italy and Germany, confirmed last week that it is in preliminary discussions with Liberty Global regarding a potential acquisition of overlapping continental European assets.

The company stressed, however, that there is no certainty the talks will lead to any transaction and a full merger between the two companies does not seem to be in the cards. For now, a deal between Vodafone and Liberty is reportedly centered on Liberty's cable business in Germany, as well as assets across Eastern Europe.

Discussions between Vodafone and Liberty emerged amid convergence across the global telecoms sector as operators look to bundle mobile and broadband services.

As the trend accelerates, Vodafone faces increasingly stiff competition from converged players such as BT Group, the U.K.'s largest provider of fixed-line, mobile and broadband services after it completed its £12.5 billion takeover of EE.

SNL Image

According to Bengt Nordström, CEO of telecom consultancy Northstream, "the market opportunity for mobile-only operators is coming to an end."

While being a pure mobile-only business had historically benefited Vodafone, he explained that a maturing market and slower growth means that fixed-mobile convergence is increasingly adopted by operators that seek differentiation in the market, as well as new sources of growth.

Kester Mann, network operator analyst at CCS Insight, said that a simpler deal structure, as opposed to a more complicated asset swap or combination, would avoid previous disputes over a valuation and likely improve conditions to reach an agreement.

"Obviously, if you are looking at an acquisition rather than an asset swap, that potentially makes things more straightforward," Mann said in an interview.

Vodafone has been on a spending spree to strengthen its fixed-line base across Europe in recent years. It acquired Germany's largest cable operator, Kabel Deutschland, in 2013 and then bought Spanish cable player ONO a year later.

In 2016, it also completed a Dutch joint venture with Liberty to create the Netherlands' second-largest mobile and cable operator, but failed to reach a similar deal in Britain.

Nordström therefore stressed that Vodafone needs to secure an integrated offering in Britain of fixed and mobile services, echoing previous analyst views that the highly competitive U.K. market would add pressure on any negotiations between the two companies

"Vodafone [and Liberty's] discussions [do not appear to] include the U.K., meaning Vodafone will still need to find a means to strengthen their fixed broadband footprint in [Britain]," he said.

Vodafone is currently in the process of completing efforts to merge its Indian assets with Idea Cellular Ltd in deal valued at $23.2 billion. The deal — a response to competitive pressure from the 2016 launch of low-cost rival Reliance Jio — follows a €5 billion write-down on its India business.