Vodafone in £6.6bn deal to buy German TV company
Kabel Deutschland deal is agreed
THEtrend for telecoms companies to move into the television market has taken another leap forward after UK-based mobile phone operator Vodafone agreed a €7.7 billion (£6.6bn) deal to buy Germany’s Kabel Deutschland.
Coming ahead of telecoms giant BT’s launch of sports television channels this summer, and after broadcaster BSkyB’s move in recent years into broadband and telephone services, Vodafone chief executive Vittorio Colao said the takeover would boost its expertise in the TV market.
He said: “Kabel Deutschland is an attractive business positioned for future growth.”
Investors appeared to agree with his optimism, with Vodafone’s shares closing the day up 0.05p at 175.9p, a 0.28% gain.
Kabel Deutschland’s board said it expected to recommend the offer to its shareholders but it could yet be derailed by an improved offer by US media group Liberty Global, owner of Virgin Media.
The acquisition, its biggest since 2007, is intended to improve Vodafone’s ability to offer consumers bundled packages of telecoms, b r o a d b a nd and television services.
The combination of Vodafone and Kabel Deutschland will result in a group with €11.5bn of revenue in Germany, from 32.4 million mobile customers, 5m broadband and 7.6m TV customers.
Vodafone said it expected synergies of more than €300m a year from the deal and believed it could boost revenues by €1.5bn by crossselling products and improving customer loyalty.
Mr Calao said the deal would add further expertise in television to Vodafone’s ranks. He said: “At the moment UK pay TV is not a priority for us.
“If the market evolves in that direction we have the assets and, after the Kabel Deutschland deal and hopefully the successful integration, we have much bigger expertise in TV in Europe.”
But he added: “Markets are different and the speed and the ul t i mate t r e nds c o ul d be different.”
Announcing its second major acquisition for a European fixedline network in 12 months, Vodafone said it would pay €87 euros per share for the group to enable it to offer more competitive packages with TV, fixed-line and broadband services to its mobile customers.
There has been increasing competition between TV companies, mobile operators and broadband companies with the rise of smartphones and tablet devices that allow consumers to watch television programmes on their phones.
Warwick Business School assistant professor of strategy, Ronald Klingebiel, said: “Mobile companies like Vodafone increas- ingly pursue multi-play strategies, offering customers an integrated package of broadband, fixed and mobile telephone lines and television.”
He added: “A deal with Kabel Deutschland would add to Vodafone’s high speed network capacity in Germany and would also allow the company to move more seriously b e yo n d mobi l e operations.”
The German market is seen as relatively undeveloped in the integration of different forms of telecommunications. Buying Kabel Deutschland could allow Voda- fone to get ahead of Deutsche Telekom, the traditional fixed-line group.
Mr Calao said: “We see ourselves not as a mobile telecoms company but a data company.
“A data company means we will be in every home and every office as well as outdoors.”
Kabel Deutschland chief executive, Adrian von Hammerstein, said: “Kabel Deutschland and Vodafone are an ideal fit.
“Together, we have the opportunity to become Germany’s leading telecommunications and television provider.”