Vodafone Group today confirmed it has entered into informal talks with cable group Liberty Global about exchanging certain assets, but highlighted it was not in discussions to combine the two companies.
Rumours emerged last week suggesting Vodafone investors were open to a potential deal with John Malone’s Liberty Global, after he said the UK-based company would be “a great fit” for the cable group.
In a statement, Vodafone responded to media speculation by stating it was in “early stages of discussions with Liberty Global regarding a possible exchange of selected assets”, without naming the units that may be involved.
Vodafone added that there is no certainty that any transaction will be agreed, with reports suggesting that there are still concerns from both sides over the complexity of the deal, as well as wide ranging regulatory issues.
Liberty Global and Vodafone have complementary businesses in several European countries, including the UK, Netherlands and Germany, and a tie-up could lead to a launch of bundled telecoms and TV services in the countries.
Vodafone’s interests in those countries, as well as Ireland, account for almost 40 per cent of its sales and earnings. The same markets account for almost three quarters of sales and earnings for Liberty Global.
Analysts claim both companies could also be interested in swap deals across Europe, including a scenario which would see Vodafone cede control of its UK and Dutch businesses and take over Liberty Global’s German operations because of similar enterprise values.
Alternatively, a Financial Times report claims Vodafone may be attracted to Virgin Media in the UK, which Liberty Global acquired last year for $23 billion, to build up a bundled cable and telecoms operation in the country.
It has been widely reported that Liberty Global has no interest in Vodafone’s emerging market operations.
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