Vodafone has confirmed ongoing talks with cable giant Liberty Global over a possible joint venture in Holland, raising questions over potential collaboration in the UK.

Tim Skinner

February 3, 2016

2 Min Read
Vodafone Liberty Dutch talks confirmed, UK next?

Vodafone has confirmed ongoing talks with cable giant Liberty Global over a possible joint venture in Holland, raising questions over potential collaboration in the UK.

Talks broke down in September after months of discussion over an exchange of assets, with neither party confirming nor denying the reason for the break down or the intended outcome. Talk of a full-blown merger was instantly shot down, so to have both parties return the table so soon suggest there’s a mutual desire to cooperate, but the mandate for doing so needs refining. It is rumoured original talks broke down over Liberty’s UK asset, Virgin Media.

Today, Vodafone released a brief statement confirming talks are restarting with Liberty Global, which owns the largest Dutch cable operator, Ziggo. As one would expect, the statement divulged little information beyond the acknowledgement of talks.

“Following recent media speculation, Vodafone Group Plc (“Vodafone”) confirms it is in discussions with Liberty Global Plc (“Liberty Global”) regarding the creation of a joint venture in the Netherlands that would incorporate both companies’ local operating businesses,” it said. “The discussions are ongoing and do not extend beyond the creation of a joint venture in the Netherlands. There is no certainty as to when or whether any transaction will be agreed.”

Despite specifying talks will not extent beyond operations in the Netherlands, Vodafone’s announcement begs the question of a potential Virgin/Vodafone deal in the UK market. While Ofcom might have its hesitations towards an O2/Three merger due to fears of reducing the number of players in the market, a hybrid Virgin/Vodafone poses a similar proposition to the BT/EE merger. With BTEE recently given the go ahead by the CMA, a response by two other major mobile and internet players makes sense.

In the event UK discussions do transpire, it is unlikely either party will consider a sale of assets. Liberty wholly acquired cable operator Virgin Media less than three years ago for £15.5bn – £3bn more than the BT/EE deal. Meanwhile, the UK is Vodafone’s second most lucrative market in Europe, according to recent financial results, where it enjoys a 24% market share; so one assumes the foundation of any talks will be over another joint venture.

It could well be the case that talks in the Netherlands act as a precursor to further cooperation in the UK market further down the line.

About the Author(s)

Tim Skinner

Tim is the features editor at Telecoms.com, focusing on the latest activity within the telecoms and technology industries – delivering dry and irreverent yet informative news and analysis features.

Tim is also host of weekly podcast A Week In Wireless, where the editorial team from Telecoms.com and their industry mates get together every now and then and have a giggle about what’s going on in the industry.

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