Vodafone Netherlands will merge with Liberty Global’s Dutch subsidiary Ziggo to form a multiplay joint venture designed to better compete with market leader KPN.
The move is a straight 50-50 venture combining Vodafone’s mobile network with Ziggo’s fixed-line infrastructure. According to Ovum’s WCIS service Vodafone currently has 26% of Dutch mobile subscribers, which is half the share of market leader KPN.
“The combination of Vodafone’s leading mobile business with Ziggo’s successful broadband and TV business creates a strong and competitive integrated communications player, which will invest in digital infrastructure, entertainment services and productivity applications for Dutch consumer, business and public sector customers,” said Vodafone Group Chief Exec, Vittorio Colao.
“Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole. This transaction marks a continuation of Vodafone’s market-by-market convergence strategy and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”
“This powerful combination of the best fixed and mobile networks in the Netherlands will deliver huge benefits to Dutch consumers and businesses,” said Mike Fries, CEO of Liberty Global. “Throughout Europe, Liberty is capitalizing on the rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity. Soon, both Ziggo and Vodafone customers in the Netherlands will be at the forefront of this new world, and we couldn’t be more excited about our partnership with Vodafone.”
“In this market, the tie-up is extremely complementary and makes perfect sense,” said Paolo Pescatore of analysts CCS Insight. “Vodafone has not made significant headway in the consumer fixed line market and Liberty Global is keen to add mobile services. One clear benefit of the JV is the ability to introduce services much more quickly, but clear decisions need to be made on brand and retail. This follows failed asset swap talks between both companies on a wider scale and it seems that both companies will now be looking to replicate this approach in other markets.”
On a media conference call Colao stressed that this deal applies solely to the Netherlands and that no wider transaction with Liberty global is currently under consideration. That didn’t prevent the majority of questions asking if there will be an equivalent UK deal, where Liberty Global owns fibre player Virgin Media, but Colao wouldn’t be drawn.
He did point out that the majority of Vodafone’s UK profit is from enterprise and on the broader issue of UK consolidation sounded unhappy about the BTEE deal and observed that a major sticking point with the Three/O2 deal is that they want to keep both network sharing deals they have. If that deal does get approved the odds will surely shorten on Vodafone and Liberty Global replicating today’s JV in the UK.