Bloomberg News

Vodafone Said to Consider Kabel Approach as Early as Next Week

February 15, 2013

Vodafone Group Plc may approach Kabel Deutschland Holding AG, Germany’s largest cable provider with a market value of 6.1 billion euros ($8.1 billion), about a potential takeover bid as early as next week, according to a person familiar with the matter.

Vodafone’s management, which is in favor of pursuing talks, is waiting for Kabel Deutschland’s earnings release, scheduled for Feb. 20, before initiating negotiations, said the person, asking not to be named because the deliberations are private.

The world’s second-largest wireless carrier is building up fixed-line assets to offload surging traffic from its mobile- phone networks. Kabel Deutschland, which provides TV, Internet and phone services to more than 8 million German households, would help Vodafone protect its market share from other cable rivals, which are increasingly offering mobile packages.

Representatives for Newbury, England-based Vodafone and Kabel Deutschland, based near Munich, declined to comment.

Kabel Deutschland had an enterprise value, which includes debt, of 7.8 billion euros at the end of September, according to data compiled by Bloomberg. The shares closed yesterday at 68.44 euros in Frankfurt and have risen 7.6 percent since reports of the takeover intention this week. Vodafone added 0.2 percent to 167.80 pence on the London exchange yesterday.

Deals involving telecommunications and media companies fetched more than $57 billion so far this year, according to data compiled by Bloomberg.

Virgin Deal

Billionaire John Malone’s Liberty Global Inc. (LBTYA:US), last week entered Newbury, England-based Vodafone’s home market with a $16 billion agreement to acquire Virgin Media Inc. (VMED:US)

If a Vodafone-Kabel Deutschland deal takes place, Liberty Global, which bought Germany’s second- and third-biggest cable operators in the past three years, would become Vodafone’s biggest competitor in the country.

Liberty Global would benefit from making further acquisitions in the German cable market, Lutz Schueler, head of the Unitymedia KabelBW unit, said in an interview this week. He declined to comment on a potential bid for Kabel Deutschland by Vodafone.

Kabel Deutschland sells TV, Web and phone services on cable networks inherited from former phone monopoly Deutsche Telekom AG. An acquisition by Vodafone would intensify competition in the fixed-line market. Vodafone and Deutsche Telekom also vie for the top spot in the German wireless market.

Owning Kabel Deutschland would also help Vodafone avoid paying Deutsche Telekom rental fees on copper lines for its TV, Internet and fixed-line offers to mobile customers. Vodafone Germany has 3.2 million fixed-line Internet subscriptions, some of which could be migrated to Kabel Deutschland’s network.

Any deal will likely require antitrust approval.

Antoine Colombani, a Brussels-based spokesman for Joaquin Almunia, the European Union’s competition commissioner, declined to comment. Kay Weidner, a spokesman for Germany’s Federal Cartel Office in Bonn, also declined to comment.

To contact the reporters on this story: Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Amy Thomson in London at athomson6@bloomberg.net; Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net


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Companies Mentioned

  • LBTYA
    (Liberty Global PLC)
    • $43.5 USD
    • 0.19
    • 0.44%
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