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Vodafone and Liberty Global to merge in Netherlands

Vodafone and Liberty Global confirm that they are to merge their Dutch businesses

Alex Scroxton
By
Published: 16 Feb 2016 9:15

Mobile network operator (MNO) Vodafone and cable and broadband provider Liberty Global are to merge their Dutch operations to create a 50-50 joint venture in the Netherlands.

The venture will bring together Liberty’s Dutch operation Ziggo – a provider of fibre-based broadband, TV and landline services – with Vodafone’s mobile network to create a quad-play operator with combined annual revenues of around €4.4bn (£3.9bn), based on results to the end of 2015.

The two operators said the combination would create a stronger fixed and mobile player in the Netherlands, with significant benefits for consumers, enterprises and public sector customers through enhanced investment in digital infrastructure.

“Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole,” said Vodafone CEO Vittorio Colao.

“This transaction marks a continuation of Vodafone’s market-by-market convergence strategy, and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”

Liberty CEO Mike Fries added: “Throughout Europe, Liberty is capitalising on the rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity.

“Both Ziggo and Vodafone customers will be at the forefront of this new world. We look forward to working together to develop cutting-edge converged services for the Dutch market.”

The deal will see Vodafone make a cash payment of €1bn to Liberty to equalise ownership in the venture, and is expected to create cost, capital expenditure and revenue synergies with a net present value of around €3.5bn after costs.

UK merger

Vodafone and Liberty Global had previously been linked in the UK, with discussions taking place in 2015 over a potential deal that would have likely seen Vodafone and Liberty’s UK operation, Virgin Media, come together in an unspecified asset sharing arrangement.

The discussions were widely seen as a precursor to a third UK telecoms mega-merger because, following the proposed acquisitions of EE and O2 by BT and Three respectively, Vodafone was widely perceived as hungry to bulk up its multi-platform offering – an appetite that the acquisition of Virgin Media could have sated.

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The discussions were halted in September 2015 after reaching an impasse. Liberty’s outspoken chairman, John Malone, said at the time that he believed a joint venture could have created some value in the market, but that neither party was able to figure out how to do that “in a mutually successful way”.

At the end of 2015, however, it emerged that the talks may be back on, with rumours circulating among traders that Malone had instigated another round of discussions. At the time, Vodafone declined to comment further on these rumours.

Read more on Telecoms networks and broadband communications