Vodafone Near Deal for $23 Billion Is Near Hefty Telecom Deal Vodafone Is Near Hefty Telecom Deal -- WSJ
May 09 2018 - 3:02AM
Dow Jones News
By Stu Woo
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (May 9, 2018).
LONDON -- Britain's Vodafone Group PLC is close to announcing a
$23 billion cash deal to buy operations in four European countries
from John Malone's Liberty Global PLC, according to people familiar
with the matter.
Liberty Global is planning to sell its businesses in Germany,
Hungary, Romania and the Czech Republic to Vodafone, the people
said.
The roughly EUR19 billion deal would face a possibly lengthy
European Union antitrust review, but if completed, would create one
of the continent's biggest telecommunications operators, selling
the industry's holy grail "quad-play" package: cable, internet,
wireless and landline-phone service on a single bill.
The Financial Times reported earlier Tuesday the two companies
were nearing a deal.
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. Vodafone in February
said the two sides were again discussing a potential merger.
The deal would entail Liberty Global selling mostly cable
operations to Vodafone, which has major wireless businesses in
Germany, Hungary, Romania and the Czech Republic, as well as a
major German cable business.
Vodafone shares closed 1.4% lower in London on Tuesday, while
Liberty Global shares fell 5.4% in New York.
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. Vodafone is
the world's second largest carrier by subscribers behind China
Mobile Ltd.
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
Chief Executive Mike 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, according to the
people familiar with the matter.
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.
"Our critical attitude is well known," said a Deutsche Telekom
spokesman on Tuesday, noting 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 02:47 ET (06:47 GMT)
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