Vodafone mulls bid for Kabel Deutschland

14 Feb 2013

UK-based Vodafone Group is considering a potential bid for Germany’s largest cable operator, Kabel Deutschland, in a move that would bolster its position in the fixed line market, writes Bloomberg, citing an unidentified person familiar with the matter. The report follows last week’s announcement that US-based Liberty Global Inc (LGI) had agreed to acquire Virgin Media in the UK. An acquisition of Kabel Deutschland would give Vodafone Germany access to 8.5 million paying households and potential customers for combined fixed line, mobile and TV services. The deal would also mean that Vodafone could avoid paying rental fees for copper lines to incumbent Deutsche Telekom. According to people familiar with the matter, Vodafone first considered a bid for Kabel Deutschland around three years ago, when the cableco’s then owner Providence Equity Partners was deciding on whether to launch an initial public offering (IPO) for the cableco or opt for a direct sale. A number of private equity firms were also rumoured to have made an offer for Kabel Deutschland, but in the end Providence decided to go ahead with an IPO. The company has since sold its entire holding, leaving Kabel Deutschland with 100% of stock in free float.

TeleGeography’s GlobalComms Database notes that Germany’s fragmented cable market was consolidated last year through the merger of Unitymedia and Kabel BW, both of which are owned by LGI. Unitymedia was purchased by LGI in January 2010 for an enterprise value of EUR3.5 billion (USD4.3 billion), while Kabel BW was snapped up from Swedish private equity firm EQT in March 2011 for EUR3.16 billion. A plan to combine the two cablecos was approved by the Federal Cartel Office in December 2011, and the merger was completed on 1 July 2012 under the name Unitymedia KabelBW. At that date, the company served around seven million customers across its combined footprint, making it the second largest cableco behind Kabel Deutschland.

Germany, Kabel Deutschland, Vodafone Germany, Vodafone Group