
Bloomberg
Vodafone Group Plc and Liberty Global Plc are looking to redraw their European spheres of interest, with the UK mobile carrier saying it wants to buy competing assets in the region as cable pioneer John Malone retrenches.
Vodafone didn’t disclose the specific markets but said the talks concern continental Europe, ruling out the UK where both companies are headquartered. In that region, the companies’ operations overlap in Germany, the Czech Republic, Hungary and Romania. They jointly run their operations in the Netherlands.
Discussions are at an early stage and there is no certainty they will lead to a deal, Vodafone said in a statement. The companies aren’t talking about an outright combination, it said. A spokeswoman for Liberty Global noted Vodafone’s statement and declined to comment.
A deal would follow other investments by Chief Executive Officer Vittorio Colao in fixed networks, to offer customers more services as data use surges. Colao said in 2017 that the company would consider expanding its alliance with Malone once their Dutch venture, started in late 2016, was proven a success. The companies have held on-and-off discussions for years, though both sides have played down chances of a full merger.
“It would almost be a surprise if we heard there weren’t talks,†said Kester Mann, an analyst at CCS Insight.
A transaction could have implications for Germany’s former phone monopoly Deutsche Telekom AG, which has also been expanding through acquisitions and competes in all the markets under consideration. Liberty Global in December agreed to sell its Austrian business to Deutsche Telekom for $2.4 billion, highlighting a potential shift in strategy for Malone, said Stephane Beyazian, an analyst at Raymond James.
In Germany, Vodafone’s biggest market, it had combined sales with Liberty Global of about $14 billion in the past year. Vodafone already has one-third of the German mobile market and a fifth of the fixed, while Liberty’s Unitymedia is the second largest cable operator. Regulators could take issue with a tie-up there, and ask for concessions. Liberty owns the largest cable operators in the Czech Republic and Hungary.
One obstacle to a broader merger between the two has been valuation. In the past year, Vodafone has gained 14 percent in London, giving it a market value of $73 billion.