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Vodafone UK Still Considering Bid for Virgin Media’s Owner to Tackle BT

Saturday, November 29th, 2014 (7:32 am) - Score 1,814

The endless jostling for dominance of the United Kingdom’s fixed line broadband and mobile telecoms market has continued after reports appeared to suggest that BT’s move to grab either O2 or EE, which was mirrored by a similar approach from Three UK’s parent, has pushed Vodafone back towards a potential acquisition of Virgin Media (Liberty Global) or possibly one of the other big fixed line ISPs (e.g. TalkTalk or Sky Broadband).

It’s not the first time that Vodafone has hinted at an interest in Virgin Media after the mobile giants CEO, Vittorio Colao, confirmed during September 2014 that he would be willing to expand upon their recent cable operator acquisitions in Spain and Germany by gobbling Liberty Global’s EU division, albeit naturally only “for the right price” (here).

Meanwhile Liberty Global only recently completed a £15bn (enterprise value) acquisition of broadband, phone and TV giant Virgin Media in the United Kingdom (here) and are still in the process of working through that transition. However, according to Reuters, five sources described as being “close to the matter” claim that internal deliberations at Vodafone have picked up pace since BT’s moved on O2 or EE was announced (here).

One of those alleged sources is quoted as saying, “Liberty is the obvious one that makes sense … Vodafone need fibre and that is what Liberty has.” Admittedly Virgin Media’s hybrid-cable network is a lot more independent than the other takeover candidate, TalkTalk, which is effectively reliant upon BT’s infrastructure. But contrary to the report Virgin do not take fibre optic cables direct to most of their homes, instead they use a mix of fibre optic and slower coaxial with some copper cables (EuroDOCSIS standard).

On top of that Virgin Media recently stopped supplying non-cable based (i.e. ADSL2+) copper broadband lines, which they previously sold by using part of BT’s network in areas where their cable infrastructure couldn’t reach. Needless to say that Vodafone UK also gave up on copper broadband services in 2011 and so we have our concerns about the ability of either operator to make a universal service, operating outside of Virgin’s cable footprint, work.

At the same time all of this competition for fixed line and mobile operator acquisitions will mean that prime targets like Virgin Media, EE and O2 (plus to a lesser extent TalkTalk) can afford to play with their prices a bit and arguably get more than they’re worth, with the prime buyers being fearful of losing out as the market moves increasingly towards converged (bundled) service provision.

It’s difficult to guess what the market might look like in 12 months’ time because all of the possible permutations, combinations and their knock-on effects are starting to become quite mind boggling. Needless to say that the competition regulator and Ofcom might well have a very busy year ahead.

Overall 2015 appears to be the year that it all changes; the year where what was once familiar becomes new and different again, fundamentally speaking. But it remains to be seen whether any of this will really be to the benefit of consumers and as ever in such a race there will be both winners and losers.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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