Vodafone Confirm Talks Over Possible Liberty Global EU Asset Swap
The prospect of mobile giant Vodafone gaining access to Virgin Media’s growing HFC cable and fibre optic (FTTP) broadband network in the UK has once again been raised. Voda has confirmed that it is in “early stage discussions” with Liberty Global regarding a “potential acquisition.”
In a statement Vodafone said that its discussions were focused upon the acquisition of “certain overlapping continental European assets owned by Liberty Global” and that they are “not in discussion with Liberty Global regarding a combination of both companies.” Liberty Global is the parent company of Virgin Media.
As we’ve said a few times before, such a deal would seem to make sense in the UK. Vodafone is strong in Mobile but their penetration into the fixed line market, especially in the United Kingdom, is still largely dependent upon Openreach’s (BT) existing FTTC / ADSL infrastructure.
The recent deal with Cityfibre to potentially rollout a 1Gbps capable Fibre-to-the-Home (FTTH/P) broadband network for up to 5 million UK premises by 2025 (here), starting in Milton Keynes (here), may give Vodafone an alternative but it will take a long time to grow scale and scale is what any serious challenger really needs.
On the flip side Virgin Media is spending £3bn to extend their ultrafast cable (HFC DOCSIS / FTTP) broadband and TV network to 60-65% of UK premises by 2019, although their Mobile (4G MVNO) platform is still dependent upon arch rival EE (BT). Meanwhile Vodafone has already shelved their UK based Pay TV (IPTV) plans but that wouldn’t be a problem if they got close to Virgin Media.
Vodafone Statement
Vodafone Group plc (“Vodafone”) notes the recent press speculation regarding a potential transaction with Liberty Global plc (“Liberty Global”).
Vodafone confirms that it is in early stage discussions with Liberty Global regarding the potential acquisition of certain overlapping continental European assets owned by Liberty Global.
There is no certainty that any transaction will be agreed, nor as to the terms, timing or form of any transaction.
Vodafone is not in discussion with Liberty Global regarding a combination of both companies.
Talks over the possibility of a mega merger or partial asset swap were first confirmed in June 2015 (here), although such a large deal would have created many complicated financial (Vodafone’s tax situation is tedious) and regulatory problems. In the end no agreement could be reached but both sides left the door open to future discussions (here). Last year the rumours started up again after various reports claimed that secret talks were on-going.
As Vodafone’s CEO, Vittorio Colao, said during early 2017, “It is still an attractive combination. The deal is not on the table. But … 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.”
However a related article in the FT (paywall) suggests that the new talks are focused on Liberty’s cable assets in Germany, as well as its holdings across Eastern Europe (i.e. not the UK). Lest we forget that Vodafone and Liberty Global only recently agreed to merge their businesses in the Netherlands via a 50:50 joint venture. Testing the waters, perhaps.
Liberty Global also recently agreed to sell its Austrian unit to Deutsche Telekom for €1.9bn. Meanwhile the uncertainty around Brexit in the UK could be giving Vodafone and Liberty Global additional pause for thought, perhaps encouraging them to look at more predictable markets first.
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 X (Twitter), Mastodon, Facebook and Linkedin.
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I am a Vodafone broadband customer wonder what this would mean for me?
Nothing as it is to do with assets in GERMANY owned by Liberty Global being purchased by Vodafone (unless you are posting from said country of course)
My prediction is that Liberty will want to acquire Vodafone’s UK assets in return for surrendering their assets in Germany to Vodafone. I think Vodafone are looking at a post Brexit future that does not feature a significant presence in the UK.
I can’t see that being the case why would they have just agreed a new FTTH rollout if they were pulling out of the UK would be very surprised if Vodafone pulls out of the UK.
I wonder if it’s possible for Vodafone to offer broadband on virgins HFC alongside them. If so that would be good to see then virgin could use Vodafones mobile structure (MVNO)
Vodafone would likely buy out Virgin and then I suppose with Cityfibre use Virgin assets to rollout Fibre likely virgin are already doing in some areas. It would get them a strong backhaul network and enable them to truly compete with BT/EE which they can’t at present. If this is good for the country is not yet known.
If it were possible to run differentiated services over the Virgin Media DOCSIS network then I assume we’d already be seeing it used to deliver their business broadband product, as opposed to the current GRE tunnel setup.
It’s a conscious decision to have the business product run at the same best effort level as the residential product.
Totally static IP addresses are more difficult and do require tunnelling, either GRE or L2TP.
We know that it’s perfectly possible to run bitstream wholesale products over the cable network, even ignoring the technical stuff because ntl already did it – they resold their cable network to AOL way back when.
Differentiated services are perfectly feasible – note that everywhere else in the Liberty footprint, and on VM when they decide to turn it on, telephony is delivered over the cable network. This uses a ‘differentiated service’ to nail up uncontended bandwidth on the DOCSIS network to deliver the symmetrical 64k for the voice call.
DOCSIS has been able to deliver ‘differentiated services’ since DOCSIS 1.1 introduced more advanced QoS and the concept of service flows.
@Mat
Vodafone purchased cable and wireless a number of years ago, specifically for its substantial uk backbone network to reduce its reliance on and payments to BT.
Vodafone have better backbone reach & backhaul capacity than VM.
@chris P I meant for the home internet market like ducts etc in last mile. You are right regarding cable and wireless and Vodafone has expanded that in last few years.