Vodafone Ends Talks With Liberty Global

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Deal with Virgin Media owner could have bolstered Vodafone’s plans to offer quad-play bundles in the UK and across Europe

Vodafone has confirmed it has ended talks with US cable provider Liberty Global that could have seen the two companies trade some of their largest assets.

Liberty, which owns Virgin Media’s UK business, among other companies across Europe, had been in talks with Vodafone over the summer, with discussions rumoured to have been underway since December of last year.

Industry analysts had suggested that Vodafone was looking to acquire Virgin Media to better compete with in an increasingly converged British communications market.

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Cable deal

While Vodafone insiders had ruled out an outright acquisition of Liberty Global, a deal could have given it access to a number of cable services across Europe, including the Netherlands, Ireland and Germany, adding to its recent acquisitions of Ono in Spain and Kabel Deutschland in Germany as well as its own fibre networks in Spain, Italy and Ireland.

However, this broad reach meant any deal was likely to have attracted the attention of competition regulators.

Liberty chairman John Malone recently said in an interview with Bloomberg that talks between the two companies were at an impasse, saying Vodafone would face difficulties raising the funds to acquire Liberty.

“On 5 June 2015, Vodafone Group confirmed that it was in the early stages of discussions with Liberty Global regarding a possible exchange of selected assets between the two companies,” Vodafone stated. “Vodafone today announces that discussions with Liberty Global have terminated.”

Quad-play bundles

The acquisition of Virgin Media, which Liberty purchased for £15 billion in 2013, would have given Vodafone access to a vast UK cable network and strengthened its plan to offer quad-play packages of broadband, mobile, landline and television packages.

Vodafone has already announced plans to offer home broadband services to customers from next year, partly powered by the Cable & Wireless network it bought in 2012, which supplies services to enterprises.

However, it may need to do more to compete with BT, which is in the process of buying EE, , the newly merged Three-O2, and new entrants such as Sky and TalkTalk, according to industry analysts.

Virgin Media has almost five million broadband customers and is currently embarking on a £3 billion network expansion named ‘Project Lightning’. For reporting purposes, Liberty combines figures for the UK and Ireland and claims its networks reach 13,512,900 premises across both countries.

At last count, Virgin Media alone reached 12.6 million homes and businesses, a footprint that Project Lightning hoped to increase to 17 million.

Vodafone did not immediately respond to a request for further comment.

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