Published: Thu, May 10, 2018
Worldwide | By Stella Potter

Vodafone clinches 18.4bn euro deal for Liberty Global assets

Vodafone clinches 18.4bn euro deal for Liberty Global assets

Vodacom parent Vodafone has agreed to buy German and Eastern European units from Liberty Global in an €18.4bn (R277bn) deal that shakes up the region's TV and broadband market and signals a retreat by U.S. billionaire John Malone.

Vodafone - already the world's second biggest mobile phone operator by subscribers after China Mobile - would become the leading next generation network owner in Europe with a reach of 110 million homes and businesses, it added in a statement. "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", said Vodafone Chief Executive Vittorio Colao.

The world's second-largest mobile operator struck a deal with US 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 will maintain a European presence in Belgium, Britain, Ireland, Poland, Slovakia and Switzerland.

It is possible that the acquisition of Liberty Global's operations in these countries will allow Vodafone to compete against dominant, local telecommunications firms, such as Deutsche Telekom.

The transaction will be subject to regulatory approval from the European Commission, which is expected mid-2019. "This is one of those moments". "I don't believe that Germany wants to go into a situation like Eastern European markets, where TV markets are dominated by telco players".

The company - which, like Vodafone, seeks to be a top carrier in each of the markets where it operates - had been struggling to find a way to gain clout with mobile services in Germany.

It will give Vodafone access to more than 54 million homes using fibre-optic broadband, providing it with the ability to sell its services to new customers, while driving efficiency savings by combining back-office and other functions.

The company said the takeover of Liberty Global's Unitymedia assets in Germany will create "a strong second national provider of digital infrastructure" and a "national challenger to the dominant incumbent", Deutsche Telekom.

Fries argued in an interview that the deal was "exactly what the German market" needed - a "stronger, more consolidated competitor to Deutsche Telekom in a market that has really lagged in innovation and investment". There is limited overlap and, therefore, no negative impact on competition resulting from the Transaction.

For TV, these include satellite (which accounts for the largest proportion of the TV segment of the German market), cable and broadband internet streaming/download offerings.

Vodafone has agreed to acquire Liberty Global assets across Europe in order to expand mobile, cable, and broadband offerings across the region.

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