Vodafone Confirms Deal to Buy Some of Liberty Global's European Assets For Nearly $23 Billion
May 09 2018 - 2:29AM
Dow Jones News
By Stu Woo
LONDON -- Britain's Vodafone Group PLC has agreed to a nearly
$23 billion deal to buy operations in four European countries from
John Malone's Liberty Global PLC, a merger that would create one of
the continent's biggest telecommunications carriers.
Liberty Global, the world's biggest international cable company,
has agreed sell its businesses in Germany, Hungary, Romania and the
Czech Republic to Vodafone, the world's second-largest wireless
carrier by subscribers behind China Mobile Ltd.
The deal, which is valued at EUR19 billion ($22.5 billion) and
would give Liberty Global EUR10.6 billion in cash, would face a
possibly lengthy European Union antitrust review. If completed, the
merger would create a continental giant selling the industry's holy
grail "quad-play" package: cable, internet, wireless and
landline-phone service on a single bill.
The deal would represent the latest in a global trend of
wireless carriers acquiring cable operations, or vice versa, to
offer quad-play packages. Wireless carriers need high-speed cable
networks to quickly transmit data to cellular towers for 5G, the
coming generation of mobile networks that promise to be fast enough
to enable near-instantaneous movie downloads and innovations such
as self-driving cars.
Both companies have said they have engaged in various forms of
merger talks with each other in recent years, but disagreed over
price. Vodafone in February said the two sides were again
discussing a potential merger. The difference this time, said
Liberty Global Chief Executive Mike Fries in an interview: "We
agreed on a price. It's that simple."
Chief Executive Vittorio Colao's strategy has been for Vodafone
to be the No. 1 or No. 2 carrier in each of the more than 20
countries where it operates. The company believes being first or
second allows Vodafone to differentiate itself through better
networks and services, and to justify higher prices.
Liberty Global, which is based in Denver and registered in
London, runs cable-focused operations in 12 European countries. Its
chairman is Mr. Malone, the billionaire media mogul, who leaves Mr.
Fries to run the company.
The deal wouldn't include Liberty Global's businesses in the
U.K. and Ireland, which compete with Vodafone's. Mr. Fries said
neither side was interested in merging those businesses.
The proposed transaction is likely to face close regulatory
scrutiny, as well as stiff opposition from Germany's Deutsche
Telekom AG over concerns it would give Vodafone too much power over
the country's TV market.
Mr. Fries said he expected European Union regulators to approve
the deal, which would close by the second half of 2019. He called
Germany a competitive market where Deutsche Telekom controls the
business, and that Vodafone's acquisition of Liberty Global's
assets there would boost innovation and investment.
A Deutsche Telekom spokesman said Tuesday that the deal would
lead to "considerable restrictions for consumers to fear. It will
be up to the antitrust authorities to examine the case carefully as
soon as it will be announced."
Asked about a potential Liberty Global-Vodafone deal during a
February conference call, Deutsche Telekom Chief Executive
Timotheus Höttges said he didn't think "this kind of concentration
in the cable market can be supported" by regulators. "I think there
will be no way that this deal is going to be approved and for us
it's completely unacceptable."
--Ben Dummett contributed to this article
Write to Stu Woo at Stu.Woo@wsj.com
(END) Dow Jones Newswires
May 09, 2018 02:14 ET (06:14 GMT)
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