Liberty Global to Bid for Base - Analyst Blog

By Zacks Equity Research,

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A leading cable operator in Europe, Latin America and Australia, Liberty Global Inc. ( LBTYA ), 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, America Movil ( AMX ) 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, respectively.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AMX , LBTYA

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