On Wednesday, Vodafone and Liberty Global won European Commission (EC) consent to proceed with their proposed 50- 50 joint venture, which will merge the companies’ respective cable, broadband and mobile telephony operations in the Netherlands. To allay competitive concerns associated with the overlap of wireline network facilities owned by the venture partners, the EC conditioned its consent upon Vodafone’s commitment to divest its Dutch fixed line business to an outside buyer. Announced in February, the transaction will combine Liberty’s Dutch cable and broadband network units with Vodafone’s Dutch wireless subsidiary, resulting in a partnership that will offer an integrated suite of cable TV, broadband, fixed wireline and mobile phone services to more than 15 million customers nationwide. Analysts have valued the deal at US$3.89 billion after integration costs. The companies expect to achieve annual costs savings of $311.7 million through the venture.
Noting that Vodafone had possessed the ability to exercise “a strong competitive constraint” in the Dutch market for bundled broadband and voice services, the EC explained that the mandated divestment “entirely removes the overlap between the activities of Vodafone and Liberty.” The EC further predicted that its condition “will allow the purchaser of the divested assets to play a competitive role similar to that of Vodafone today.” Vodafone has also informed the EC that the sale could include access to the joint venture’s wireless network that would enable the buyer to function as a mobile virtual network operator. EC Competition Commissioner Margrethe Vestager remarked that the commitments offered by Vodafone “ensure that Dutch customers will continue to enjoy competitive prices and good choice.” Applauding the EC’s decision, a Vodafone spokesman confirmed that, “having already received a number of expressions of interest, the parties will now proceed with the sale process.”