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Vodafone UK and Virgin Media Reignite Talk of a Possible Asset Swap

Thursday, March 16th, 2017 (8:29 am) - Score 9,692

The rumour mill is turning again as a new report claims that mobile giant Vodafone has reopened secret talks with European cable operator Liberty Global, which raises the possibility of an asset swap with their Virgin Media division in the United Kingdom.

Talks over the possibility of a mega merger or asset swap were first officially confirmed in June 2015, following several months of speculation (here). At the time it was claimed that some of Vodafone’s biggest shareholders had been putting pressure on the mobile giant to do a deal with Liberty Global.

As part of this Vodafone might have benefited by gaining access to a much bigger fixed line cable and TV network, which would help it to compete with BT in the UK (BT recently merged with Vodafone’s rival EE). On the flip side Liberty Global would have secured their own Mobile platform and this might have broken Virgin Media free from their Mobile Virtual Network Operator (MVNO) shackles with BT / EE.

Unfortunately the two struggled to reach a mutually agreeable price and thus the prospect of a deal collapsed (here). No doubt Vodafone’s complicated financial (tax) and regulatory situation might have also caused a few headaches. Never the less both sides did leave the door open to the possibility of future negotiation.

Fast forward from 2015 to February 2017 and Vodafone’s CEO, Vittorio Colao, started to hint at a change. “It is still an attractive combination. The deal is not on the table. But as a project, it’s an interesting project. If Europe wants the creation of real alternatives to incumbents [like BT, then] Vodafone and Liberty are the only two guys in town,” said Colao.

Now The Register claims to have been told by a company insider that negotiations have reopened, with talks taking place on the fourth floor of Vodafone’s HQ in Newbury (Berkshire). “Only certain high-level members of staff are permitted access. Visitors are permitted but only from Liberty Global,” said the source. Liberty Global’s Chief Development Officer and SVP, Andrea Salvato, is allegedly leading the discussions for his company.

Once again various options are likely to be discussed and we note that the pair have recently completed a similar merger in the Netherlands, which may have improved the prospects for a deal in the UK. However it’s worth pointing out that Virgin Media only recently signed a major new MVNO deal with BT / EE (here), which might complicate matters. It’s worth pointing out that Vodafone also recently shelved their plans for launching a Pay TV service in the UK (here).

Otherwise we’d agree that some form of deal to connect Vodafone and Virgin Media in the UK does make a lot of sense, provided both sides can overcome the many complicated challenges involved and agree on a price. Meanwhile there are also reports that Liberty Global might have an interest in O2 UK (here), although it’s hardly a surprise that such claims would occur at the same time as the alleged Vodafone talks (tactical).

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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.
Leave a Comment
5 Responses
  1. MrWhite says:

    That’s odd. All the buildings in Newbury are only 3 floors…

  2. Philip says:

    There is no 4th floor in Newbury. Paddington. Yes.

  3. Sid says:

    How does connecting Vodafone and Virgin Media make sense? Can someone clarify me on that?

  4. Xavier says:

    There is no point in swapping assets between Vodafone and Virgin Media in my opinion…

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