Vodafone and Liberty Global back in talks over European assets

By:
James Pearce
Published on:

Vodafone confirms it is holding discussions with Liberty Global about buying some of its "overlapping European assets"

Liberty Global and Vodafone previously held talks over a potential asset swap, but these collapsed around two years ago. They then agreed to merge their Dutch units, and speculation has been rife about further deals ever since.

In a statement, Vodafone said the current round of discussions are at an “early stage” and are centred on it buying unspecified “overlapping continental European assets”.

The deal, according to the Financial Times, could be worth more than €14 billion in value and would see John Malone – Liberty’s primary shareholder – retreat from the European market. The talks, the FT adds citing an unnamed source, are focused on Germany and other eastern European markets.

In Germany, Liberty Global owns Unitymedia, the country’s second largest cable operator. Unitymedia offers triple-play services consisting of video, broadband internet, and fixed-line telephony (VoIP) to 13.0 million service subscribers represented by 7.2 million customers as of September 30, 2017.

Vodafone has its own German arm, which offers mobile, DSL, cable, and IPTV services. It had around 30 million mobile customers in Germany at the end of 2017, making it Vodafone’s largest European market.

Liberty and Vodafone also have overlapping operations in Hungary, Romania and the Czech Republic. Vodafone’s statement also appears to rule out talks over a deal in the UK, with reports claiming Liberty-owned Virgin Media is not part of the discussion.

In a statement, Vodafone said: “Vodafone confirms that it is in early stage discussions with Liberty Global regarding the potential acquisition of certain overlapping continental European assets owned by Liberty Global.

“There is no certainty that any transaction will be agreed, nor as to the terms, timing or form of any transaction. Vodafone is not in discussion with Liberty Global regarding a combination of both companies.”

Both companies have been active in the M&A space since talks broke down between them in 2015. On top of the merger of their Dutch units in a 50:50 joint venture, Vodafone has agreed to merge its struggling India unit with rival Idea Cellular in a dealing currently undergoing regulatory scrutiny.

Liberty has also been active, agreeing to sell its Austrian unit for €1.9 billion to Deutsche Telekom whilst also looking to offload its Swiss division. It has also span off its Latin American operations into a separate unit, called Lilac.