London (AFP) – British telecoms giant Vodafone announced Wednesday an 18.4-billion-euro deal to buy parts of Liberty Global’s operations that will make it Europe’s largest cable and broadband operator.
The deal for assets of the US group, worth $21.9 billion or £16.1-billion, will see Vodafone become the second biggest player in eurozone powerhouse Germany, while it will acquire operations also in the Czech Republic, Hungary and Romania, it said in a statement.
Vodafone — already the world’s second biggest mobile phone operator by subscribers after China Mobile — will now become the leading next generation network owner in Europe with a reach of 110 million homes and businesses, it added.
“This transaction will create the first truly converged pan-European champion of competition,” said Vodafone chief executive Vittorio Colao.
“We are committed to accelerating and deepening investment in next generation mobile and fixed networks, building on Vodafone’s track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators.”
Following the deal, London-listed Vodafone will be serving the largest number of mobile customers and households across the EU.
– ‘National challenger’ –
The acquisition of Unitymedia in Germany would create a “national challenger”, Vodafone said, throwing the gauntlet down to dominant player Deutsche Telekom.
“The combination of Vodafone and Unitymedia’s non-overlapping regional operations will establish a strong second national provider of digital infrastructure in the German market,” the British telecoms giant added.
The deal, which remains subject to regulatory approvals, is expected to close in mid-2019.
Liberty said in a separate statement that the deal would boost returns for its shareholders and allow it to prioritise growth elsewhere.
Liberty chief executive Matt Fries added that the sale would inject competition into the European sector, helping to drive technology.
“Now more than ever, Europe needs strong competition from scaled national challengers willing and able to invest in next-generation wireless, video and broadband services,” he added.
Colorado-based Liberty Global — which purchased Britain-based Virgin Media in 2013 for 17.2 billion euros — is controlled by US tycoon John Malone.
After the deal’s completion, Liberty will maintain a European presence in Belgium, Britain, Ireland, Poland, Slovakia and Switzerland.
Liberty and Vodafone also operate a joint venture, Vodafone Ziggo, in the Netherlands.
In morning London stock market deals, Vodafone’s share price added 0.55 percent to 208.70 pence.
In Frankfurt however, Deutsche Telekom shares slid two percent to 14.22 euros.
– Quad-play provider –
“Liberty is offloading businesses in Germany and eastern Europe… in a move that will enable Vodafone to become the big quad-play provider in the region,” said ETX Capital analyst Neil Wilson, referring to bundles sold to customers comprising fixed and mobile phone services along with broadband Internet and pay-television.
“Deutsche Telekom shares dipped… as its hegemony looks to be threatened.”
Separately on Wednesday, Deutcshe Telekom lifted its 2018 earnings forecast as it presented first-quarter results, saying fast growth especially in US arm T-Mobile would juice its operating income.
Net profit at the firm increased 32.8 percent year-on-year between January and March, to 992 million euros.