Vodafone’s proposed $23 billion play for Liberty Global operations in Germany, Hungary, Czech Republic, Hungary and Romania won’t be a slam dunk, an industry analyst believes.
Though the deal would position Vodafone to establish a stronger rival to Deutsche Telekom, “we strongly believe that regulators will block or restrict the deal,” Paolo Pescatore, VP of multiplay and media at CCS Insight, explained in a research note. “Vodafone and Liberty Global have a relatively solid presence in the fixed-line and TV markets, so any move would cut the number of companies in both segments.”
But Pescatore also stressed that the proposed deal is beneficial to both sides, as it will enable Liberty Global to dispose of what he views as non-core assets and help it strengthen its position in other markets, including the United Kingdom. Likewise, the deal will bolter Vodafone’s convergence initiative, as nearly 30% of European service revenue now comes way of its fixed-line business, and has parallels with its previous acquisitions of Kabel Deutschland in Germany and Ono in Spain.
Thought the proposed deal “is not a game changing move,” it would reinforce the notion that operators need to own both fixed and mobile networks in the 5G era, Pescatore pointed out.
“The joint venture in the Netherlands’ has laid out the blueprint for both companies to come closer together,” he added.