Vittorio Colao, the CEO of U.K.-based Vodafone, said in an interview that he would consider acquiring cable giant Liberty Global if the price was right. Speaking at a Goldman Sachs presentation, Colao said that Vodafone could participate in a transformational M&A deal in the future, adding that the company would be in a stronger position to make such a deal after it completes its €19 billion (US $24.6 billion) Project Spring investment strategy, which is expected to run through March 2016.
With the rise in popularity of quad play bundled services in Europe and other sophisticated markets, mobile operators are searching for opportunities to offer fixed broadband and TV services alongside their traditional telephony and mobile data. Vodafone has been increasing its fixed line footprint lately by making acquisitions—last year it bought Kabel Deutschland and this year added Spanish cable operator Ono to its holdings. Liberty Global, for its part, sees the benefits of the same synergies, as it has entered into resale agreements with mobile providers. It is also on the hunt for more fixed line capacity, as evidenced by its agreement earlier this year to buy Dutch cable operator Ziggo. In fact, Vodafone’s acquisition of Kabel Deutschland came at the expense of Liberty, which was beaten out for the deal.
In today’s climate of saturated markets, ever-tighter competition and decreasing mobile ARPU, offering cable services is becoming more of a necessity than a choice for MNOs. While Vodafone has not entered into any discussions yet, Liberty is a particularly appropriate choice for a deal, given its size and value of US $33 billion. Colao’s statement, while far from definitive, is a good indication that a Vodafone-Liberty merger attempt is eventually likely, if not imminent.
“If Vodafone does indeed merge with Liberty Global, the resulting entity could be the king of quad plays in the European market—a highly desirable thing to be in this era of increasing demand for such offerings. It only remains to be seen whether Vodafone will take its pattern of snapping up broadband companies to its logical conclusion.”
Serge Fisun, Research Analyst at Tarifica
The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues: http://www.tarifica.com/TarificaAlert.aspx