Vodafone Group PLC is now in an agreement to buy Liberty Global’s businesses in four European countries in a deal worth nearly $23 billion, a merger set to create one of the largest telecommunications carriers in the continent.
The largest international cable company in the world, Liberty Global, has agreed to sell its divisions in Germany, Czech Republic, Hungary and Romania to British Vodafone Group, the second-biggest wireless carrier in the world by subscribers.
Valued at $22.5 billion (EUR19 billion), the deal which will be facing a potential long antitrust review by the European Union, would provide a cash of EUR10.6 billion to Liberty Global. A continental giant selling a single bill internet, landline phone, and wireless service would be created through the merge if the deal pulls through. It would also represent the latest merger proposal which is trending globally among wireless carriers to improve service operations. High-speed cable networks is all it takes to build solid wireless carriers to enable a quick data transmission to cellular towards for 5G – the next generation mobile networks promising fast downloads to enable other innovations such as self-driving cars.
Both Vodafone and Liberty Global said they have been considering merging for some time now, and have held talks on it in recent years. In February, Vodafone revealed that both companies were discussing a potential merger. According to Mike Fries, Liberty Global Chief Executive, this time, the difference is that “we agreed on a price. It’s that simple.”
Vodafone CEO, Vittorio Colao has been strategizing to make the company the No. 1 or No. 2 carrier in each of the countries (more than 20) it operates. Vodafone believes that justifying higher prices through better networks and services are the major attributes of being first or second. Denver-based Liberty Global operates in 12 European countries with cable-focused services and registered in London. The company is chaired by a billionaire media mogul, Malone, but Fries runs the business.
Liberty Global’s operations in Ireland and the U.K which firmly compete with Vodafone are not part of the merger deal. Fries said neither of the companies has interest in merging those divisions.
Germany's Deutsche Telekom AG is likely going to oppose the proposed transition which will face regulatory scrutiny over concerns that Vodafone would gain too much power. The deal which would close before the end of 2019 is expected to be approved by European Union regulators, Fries said. He also proposed a boost of investment and innovation in Germany where Deutsche Telekom controls competitive market sequel to Liberty Global’s acquisition.
The deal would cause "considerable restrictions for consumers to fear. It will be up to the antitrust authorities to examine the case carefully as soon as it will be announced," said a Deutsche Telekom spokesman on Tuesday.
In a conference call with Timotheus Höttges, Deutsche Telekom CEO, on Vodafone-Liberty Global merger deal, said he didn’t think that regulators would not support such cable market, "I think there will be no way that this deal is going to be approved and for us, it's completely unacceptable."\