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Vodafone in early talks to buy Germany's biggest cable operator Vodafone in early talks to buy Germany's biggest cable operator
(4 months later)
Vodafone has confirmed that it is in early talks about buying Germany's biggest cable operator, Kabel Deutschland.Vodafone has confirmed that it is in early talks about buying Germany's biggest cable operator, Kabel Deutschland.
The world's second biggest mobile operator said it had made a preliminary approach after mounting speculation about a potential €10bn (£8.5bn) deal.The world's second biggest mobile operator said it had made a preliminary approach after mounting speculation about a potential €10bn (£8.5bn) deal.
A deal would allow Vodafone immediate access to the German company's infrastructure at a time when customers are increasingly keen to take television, broadband, mobile and fixed-line services from one provider.A deal would allow Vodafone immediate access to the German company's infrastructure at a time when customers are increasingly keen to take television, broadband, mobile and fixed-line services from one provider.
Vodafone has around 404m customers, with 32m in Germany at the end of March making it the country's biggest mobile operator. Kabel Deutschland provides cable services to around 15m homes.Vodafone has around 404m customers, with 32m in Germany at the end of March making it the country's biggest mobile operator. Kabel Deutschland provides cable services to around 15m homes.
In a brief statement the company said: "Vodafone notes the recent speculation regarding a potential offer for Kabel Deutschland and confirms that it has made a preliminary approach to KD regarding a possible offer for the company.In a brief statement the company said: "Vodafone notes the recent speculation regarding a potential offer for Kabel Deutschland and confirms that it has made a preliminary approach to KD regarding a possible offer for the company.
"There is no certainty that any offer will ultimately be made nor as to the terms on which any such offer might be made.""There is no certainty that any offer will ultimately be made nor as to the terms on which any such offer might be made."
Shares in Vodafone, which went ex-dividend on Wednesday, fell by 5.7%.Shares in Vodafone, which went ex-dividend on Wednesday, fell by 5.7%.
"It looks like it wants to spend on [acquisitions] now, which brings risk to the table with the possibility of acquired assets failing to deliver growth desired and needed to revive growth in a stagnant Europe," said Mike van Dulken, head of research at Accendo Markets."It looks like it wants to spend on [acquisitions] now, which brings risk to the table with the possibility of acquired assets failing to deliver growth desired and needed to revive growth in a stagnant Europe," said Mike van Dulken, head of research at Accendo Markets.
Vodafone made it clear earlier in the year it was in the market for deals in Europe, saying it would be possible without selling a stake in US group Verizon Wireless. Its partner Verizon Communication has stated it would like to buy the stake.Vodafone made it clear earlier in the year it was in the market for deals in Europe, saying it would be possible without selling a stake in US group Verizon Wireless. Its partner Verizon Communication has stated it would like to buy the stake.
Vodafone recently negotiated a deal with Deutsche Telekom in Germany allowing it to rent fixed lines from the group in order to offer customers television and broadband services.Vodafone recently negotiated a deal with Deutsche Telekom in Germany allowing it to rent fixed lines from the group in order to offer customers television and broadband services.
"What might perturb investors is that this approach comes so soon after Vodafone signed a wholesale deal with Deutsche Telekom that was seen and touted as a solution to their convergent needs," Deutsche Bank analysts said in a noteon Wednesday."What might perturb investors is that this approach comes so soon after Vodafone signed a wholesale deal with Deutsche Telekom that was seen and touted as a solution to their convergent needs," Deutsche Bank analysts said in a noteon Wednesday.
"To then approach Kabel Deutschland suggests that this is merely an infill and that infrastructure ownership is ultimately necessary to provide a fully competitive convergent offer. Unsurprisingly this is likely to read across into other markets such as Italy and Spain where Vodafone is losing competitive share, and also other European markets.""To then approach Kabel Deutschland suggests that this is merely an infill and that infrastructure ownership is ultimately necessary to provide a fully competitive convergent offer. Unsurprisingly this is likely to read across into other markets such as Italy and Spain where Vodafone is losing competitive share, and also other European markets."
So-called "quad play" services, where operators offer customers television, broadband, mobile and fixed-line services, have become increasingly popular in France and Spain, but Germany is considered to be behind.So-called "quad play" services, where operators offer customers television, broadband, mobile and fixed-line services, have become increasingly popular in France and Spain, but Germany is considered to be behind.
A deal between Vodafone and Kabel Deutschland would potentially give the combined group a competitive edge in this market, and would also allow Vodafone to defend its market share in Germany.A deal between Vodafone and Kabel Deutschland would potentially give the combined group a competitive edge in this market, and would also allow Vodafone to defend its market share in Germany.
"We have consistently argued that Vodafone needs to buy infrastructure across Europe to restore its competitive position in the face of convergent offers, and to potentially pre-empt new competition from cable operators facilitated by rapid rollout," said Deutsche Bank."We have consistently argued that Vodafone needs to buy infrastructure across Europe to restore its competitive position in the face of convergent offers, and to potentially pre-empt new competition from cable operators facilitated by rapid rollout," said Deutsche Bank.
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