A leading cable operator in Europe, Latin America and Australia,
Liberty Global Inc.
), which currently holds a 50.2% stake in Telenet, announced its
intention to bid for KPN's subsidiary BASE, a leading telecom
carrier in Belgium.
Earlier, Mexican telecom company,
) offered €2.6 billion to buy 28% shares of KPN. Deteriorating
profits, persisting economic crisis in the European region has
forced KPN to entertain takeover bids.
In the recent past, Liberty Global has pursued a few major
acquisitions, which resulted in some financial constraints for the
company. So the company's plan to join forces with other private
equity owners to attain the much-needed financial flexibility.
Through its indirect controlling ownership interest in Telenet
(50.2%), Liberty Global provides TV, phone and broadband
communications services in Belgium. However, the company lacks
proper mobile network and has to pay Belgian rival Mobistar to
offer mobile services.
So, the acquisition of KPN-owned BASE will not only help them to
overcome this problem but also enable access to 4.4 million
subscribers of BASE.
Liberty Global initiated its business restructuring process back
in 2010. The company is currently concentrating primarily in Europe
and Latin America while divesting operations in other parts of the
world. Germany is one of the major growth areas for Liberty Global
where it has completed two major acquisitions. Liberty Global
acquired UnityMedia GmbH and Kabel Baden-Wuerttemberg GmbH & Co
KG, the second and third largest cable TV companies in Germany,
Western Europehas emerged as a lucrative market for cable
operators. These markets are witnessing growing demand for pay-TV
services together with triple-play bundled services that combines
basic cable TV, Internet, and telephony. In the coming years, we
believe Liberty Global's revenue will continue to benefit from a
'triple play' of video, broadband, and telephone, as it signs up
more "bundled" customers in Europe.
We maintain our long-term Neutral recommendation for Liberty
Global. Currently, Liberty Global has a Zacks #5 Rank, implying a
short-term Strong Sell rating on the stock.
Denver, Colorado-based Liberty Global Inc. is the largest triple
play cable operator in the international market, providing video,
voice, and Internet access in 14 countries.
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