Vodafone's Liberty Global Deal Gets EU Nod -- Update
July 18 2019 - 8:19AM
Dow Jones News
(Adds responses from Vodafone and Liberty Global,
background)
--The European Union's antitrust body has cleared Vodafone's
acquisition of Liberty Global assets in Europe with conditions
--Vodafone offered remedies, including a wholesale agreement
with Telefonica Deutschland, to ease regulators' concerns
--The deal is now expected to close on July 31
By Adria Calatayud
The European Union's antitrust authority has cleared Vodafone
Group PLC's (VOD.LN) acquisition of some assets from Liberty Global
PLC (LBTYA), paving the way for a multibillion-euro deal that is
set to reshape the European telecoms market.
The European Commission said Thursday that remedies offered by
Vodafone, including a wholesale agreement with Telefonica
Deutschland AG (O2D.XE), addressed its competition concerns.
After the regulatory approval, Vodafone's acquisition of
Liberty's assets in Germany, Hungary, Romania and the Czech
Republic is now expected to be completed by July 31, both companies
said in separate statements.
The deal strengthens Vodafone's presence in Germany--its largest
market--and creates a continental giant offering cable, internet,
wireless and landline-phone services. Meanwhile, John Malone's
Liberty will receive a cash windfall at a moment when telecom
operators are investing in the roll-out of next-generation 5G
networks.
"With the European Commission's approval of this transaction,
Vodafone transforms into Europe's largest fully-converged
communications operator, accelerating innovation through our
gigabit networks and bringing greater benefits to millions of
customers," Vodafone Chief Executive Nick Read said.
Liberty welcomed the regulator's decision and said the deal
leaves the company with a significant cash balance. Liberty will
continue to operate in the U.K., Ireland, Belgium, Switzerland,
Poland and Slovakia, it said.
In addition to the pact with Telefonica Deutschland--which gives
Telefonica access to the merged entity's cable network in
Germany--Vodafone committed to refrain from contractually
restricting broadcasters carried on the merged entity's TV platform
from also distributing their content via an over-the-top
service.
Vodafone also proposed not increasing the feed-in fees paid by
free-to-air broadcasters for transmission via Vodafone's cable
network in Germany and to continue to carry their signal, the
commission said.
EU regulators in December said they had opened an in-depth
investigation into the deal, as the European Commission was
concerned the acquisition may reduce competition in Germany and the
Czech Republic.
Vodafone agreed to buy the Liberty Global operations in May last
year. Liberty said the deal has a total enterprise value of 19
billion euros ($22.5 billion at the time) based on U.S. accounting
rules, while Vodafone valued it at EUR18.4 billion using
international standards.
The acquisition put pressure on Vodafone's balance sheet,
leading the company to cut its full-year dividend by 40%,
streamline its portfolio through deals such as the $2.2 billion
sale of its New Zealand arm and pursue network-sharing agreements
with rival operators like Telefonica SA's (TEF.MC) O2 in the
U.K.
Vodafone shares rose on news of the EU approval and at 1147 GMT
traded 0.9% higher at 127.20 pence, having fallen nearly 44% since
the deal was agreed.
Write to Adria Calatayud at
adria.calatayudvaello@dowjones.com
(END) Dow Jones Newswires
July 18, 2019 08:04 ET (12:04 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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