Liberty Global to Enhance EU Operations - Analyst Blog

Liberty Global plc. ( LBTYA ) is trying to fortify its leading position in the European cable and TV industry. Recently, the company formed a 50-50 joint venture with Discovery Communications Inc. ( DISCA ) to acquire U.K.-based TV content producer group AII3 Media. The deal is valued at GBP550 million (approximately $932 million) and is expected to close by the third quarter of 2014, subject to customary regulatory approval.

AII3 Media is currently controlled by private equity firm Permira Advisers LLP. The company's popular TV productions include Skins , Hollyoaks , Midsomer Murders , to name a few. The company generated 505 million pounds in total revenue in the fiscal year ended Aug 2013. Both Liberty Global and Discovery will invest around GBP90 million in cash and the rest of the amount will be generated through equity and credit facilities raised at All3Media.

Unitymedia GmbH, the German subsidiary of Liberty Global, is looking to expand its mobile stores Germany. Currently, the nation's third and fourth largest wireless operators, namely, Telefonica S.A. ( TEF ) and Royal KPN N.V. are seeking regulatory approval for a merger between their German units. The European regulatory authority will deliver its decision on Jun 26, 2014.

The merged entity will have more than 44 million mobile subscribers surpassing Vodafone Group plc. ( VOD ) and Deutsche Telekom AG. However, the regulator may ask the Telefonica-Royal KPN combine to divest some of their wireless customers and stores in order to control monopolistic power. Unitymedia is aiming to acquire these divested wireless subscribers and stores that will put up for sale.

Currently, Unitymedia operates 300 mobile stores in west and southwest Germany where it offers triple-play broadband Internet, telephony and pay-TV bundle services. The company also provides mobile phone services to about 240,000 subscribers using Telefonica Deutschland Holding AG's network. Liberty Global currently carries a Zacks Rank #4 (Sell).

In Mar 2014, Bloomberg had reported that Liberty Global intends to establish a pan-European mobile virtual network operator (MVNO) system to provide mobile phone services.

MVNO is a company which uses the established network infrastructure of an existing wireless operator to offer its own services. Consequently, the company will become a competitor to major wireless operators, such as Vodafone, Deutsche Telekom, Royal KPN N.V. and Belgacon.

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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.

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

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