Liberty Global Inc.
(
LBTYA
), a leading global cable TV and diversified broadband services
provider, recently acquired Kabel Baden-Wuerttemberg GmbH & Co
KG, the third largest cable operator in Germany. After taking a
long-time to make up its mind, German antitrust authority (Cartel
Office) has finally taken a decision in favor of Liberty Global. In
March 2011, the company won the auction and purchased Kabel
Baden-Wuerttemberg for approximately $4.2 billion. Earlier, in
January 2010, Liberty Global acquired UnityMedia GmbH, the second
largest cable operator of Germany.
However, in June 2011, the European Union regulators decided to
refer the case to the Cartel Office for properly investigating the
possible harmful effects of the deal. Earlier, the German antitrust
authority has described the merger of large cable operators to be
detrimental to the competition in the national cable TV market. It
believes that the merger of large cable operators may keep rivals
out of the market for providing free-TV services to the housing
associations. The housing associations of Germany negotiates
contracts collectively with tenants and these contracts are
generally long term (for e.g. 5 years) in nature. Furthermore, the
TV channels, who develops contents, may have to pay more to air for
their respective programs over the cable networks.
In an interesting decision, the Cartel Office announced that it
has granted the acquisition proposal due to far reaching
consequences. Liberty Global remains committed to allow its
competitors to bid for long-term contracts with residential
property companies while discarding other contractual rights
including the basic encryption of digital free TV channels. The
Cartel Office thinks these concessions will offest the negative
effects of the consolidation of cable TV market in Germany.
Germany is the fastest growing economy in Europe and its cable
TV market is highly lucrative. Currently, Liberty Global is a
formidable player in this market offering triple play video, voice
and Internet services. The enlarged Liberty Global will manage
around 7 million subscribers coming second to Kabel Deutschland
GmbH, which manages approximately 12 million subscribers. However,
with respect to both revenue and profit, Liberty Global may outpace
Kabel Deutschland with an annual revenue run rate of about $2.1
billion.
Deployment of high-speed DOCSIS 3.0 network has helped Liberty
Global to differentiate its offerings in the industry. With DOCSIS
3.0, the company can now offer speed compared with other large
European cable operators, such as
Virgin Media Inc.
(
VMED
) and
BT Group plc.
(
BT
). Management has decided to deploy EuroDOCSIS 3.0 in the range of
80%-90% of all UPC broadband divisions in Western, Central, and
Eastern Europe. The company is also conducting DOCSIS 3.0 trial
runs in Belgium.
BT GRP PLC-ADR (
BT
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LBTYA
): Free Stock Analysis Report
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VMED
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