Vodafone confirms talks with Liberty Global

Vodafone has confirmed that it is in “early stage discussions with Liberty Global” about potentially acquiring parts of its European operations.

Mike FriesIn a statement Vodafone said that it is in talks with Liberty Global about possibly buying “overlapping continental European assets owned by Liberty Global”.

It stressed that it was not in merger talks and said that there is no certainty any transaction will be agreed, or what the terms or timing might be.

According to a Financial Times report, the discussions are focused on Liberty’s cable assets in Germany, though the two companies also have overlapping operations in the Czech Republic, Hungary and Romania.

Liberty’s UK and Irish operations – namely TV, broadband and phone provider Virgin Media – are not included in the discussions.

In Germany Liberty’s operations are run by Unitymedia, the country’s second largest cable operator with some 13 million service subscribers as of September 2017 across video, broadband internet, and fixed-line telephony.

Vodafone is Germany’s cable leader following its acquisition of Kabel Deutschland in 2013.

The news comes after T-Mobile Austria agreed to buy Liberty Global-owned cable operator UPC Austria for an enterprise value of €1.9 billion (US$2.4 billion) late last year.

Speaking at the UBS Annual Global Media and Communications conference in December, Liberty CEO Mike Fries commented that “national scale is what matters in Europe” and said Liberty would be a “buyer or a seller” in markets where it lacked scale.

He has also noted the need for original programming, telling investors last year: “Now, while connectivety in king, I like to say content is perhaps the Kong.”

Liberty Global and Vodafone agreed to create a Dutch joint venture in 2016, establishing a converged fixed and mobile communications operator that could compete more effectively with KPN. The deal was completed a little over a year ago.

Vodafone also held early stage discussions with Liberty Global about a “possible exchange of selected assets” in 2015 but the two companies later terminated the talks after failing to reach an agreement.

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