Is Vodafone Eying Liberty Global to Strengthen Foothold?
The ongoing consolidation trend in the telecom industry is likely to be replicated across Atlantic. Quoting unnamed sources, both Bloomberg and Reuters reported that Vodafone Group Plc. (VOD) is mulling over the acquisition of Liberty Global Plc. (LBTYA). However, none of the companies have officially confirmed the news.
Vodafone is a major global wireless service provider with a strong foothold in Europe, Africa and Asia (Middle-East, South, and Asia-Pacific regions). On the other hand, Liberty Global is a leading cable MSO (multi service operator) serving 12 European countries along with Chile offering triple-play fixed telephony, high-speed broadband (Internet) and next-generation video services.
Therefore, a merger between Vodafone and Liberty Global would create a telecom behemoth offering state-of-the-art quad-play services, viz, wireless, fixed telephony, high-speed Internet and video. Notably, Vodafone is presently striving to fortify its fixed-broadband network whereas Liberty Global is eyeing the mobile service arena. Thus, the two entities will complementary to each other post the merger.
Vodafone’s keenness in consolidating its footprint in Europe may be response to BT Group Plc.’s (BT) recent decision to make a foray in the UK’s wireless market. BT Group, a diversified communications service provider is currently considering the acquisition of either O2 or EE. O2 is a division of Telefonica SA (TEF) while EE is jointly controlled by Orange SA (ORAN) and Deutsche Telekom AG.
Together Vodafone and Liberty Global will have a market capitalization of around $135 billion and will generate total revenue of more than $80 billion per annum. However, the merger proposal of Vodafone and Liberty Global may face strict regulatory scrutiny as the two companies’ operations overlap in the UK, Germany and the Netherlands.
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