Will Vodafone and Liberty Global Exchange Telecom Assets? - Analyst Blog

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According to a recent Bloomberg report, the U.K. telecom giant Vodafone Group Plc.VOD and cable TV behemoth Liberty Global Plc.LBTYA are negotiating for a possible asset swap deal. Currently, the negotiation is at preliminary stage and neither side has officially confirmed anything. Nevertheless, Bloomberg reported that the discussion is going on for a range of transactions including a series of asset swaps of the two company's global operations.

A possible merger between Vodafone and Liberty Global has been making the rounds for over a year in the industry circle. However, nothing concrete has materialized so far. Vodafone is particularly interested in the Western European operations of Liberty Global and wants to vend its businesses in the Middle East and Africa.

On the other hand, an association with Vodafone will enable Liberty Global to offer quad-play bundled services including video, landline phone, broadband data (Internet) and wireless services. Liberty Global offers both basic and digital video services, telephony and high-speed Internet (broadband) services whereas Vodafone provides 4G LTE and LTE-Advanced wireless networks and fixed-line broadband.

Over the last couple of years, the UK telecom sector has been witnessing a wave of consolidation. Introduction of latest network technologies has significantly intensified competition in this market. In order to attain economies of scale to remain competitive, several telecom companies are looking for merger options in a bid to offer quad-play services of wireless, wireline, high-speed Internet (data) and video services.

In Feb 2015, BT Group Plc. BT entered into a definitive agreement with Orange SA ORAN and Deutsche Telekom AG to acquire a 100% stake in U.K.-based wireless operator EE. Notably, the deal is valued at GBP 12.5 billion (approximately $19.5 billion). Meanwhile, in Mar 2015, Telefonica SA TEF divested O2, its wireless carrier in the U.K., to Hutchison Whampoa Ltd. for $15.3 billion.

Earlier, Vodafone had acquired the fixed-broadband businesses of Cable and Wireless and Liberty Global took over Virgin Media, a leading cable MSO (Multi Service Operator) in the U.K. Small-sized wireless operators such as Talk Talk and Sky are other potential acquisition candidates.

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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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