On Tuesday, Liberty Global and British wireless giant Vodafone shored up their competitive position in the Netherlands with an agreement to merge their Dutch operations into a joint venture that will offer an integrated suite of cable TV, broadband, fixed wireline and mobile phone services to more than 15 million customers nationwide. Announced in the wake of the European Commission’s decision last week to approve Liberty’s US$1.48 billion acquisition of Belgian wireless carrier BASE, the 50-50 partnership combines the second-largest providers of cable TV and mobile services in the Netherlands. The deal also represents the latest in a string of similar transactions to impact the European telecommunications sector, where key players are jockeying to offer lucrative “quadruple play” packages of fixed line, mobile phone, broadband and video services in an effort to boost revenues while adding or retaining subscribers.
More than 4.2 million cable TV customers, 3.2 million high-speed broadband customers, 2.6 million fixed line phone service subscribers, and 5.3 million wireless subscribers will be covered by the Liberty-Vodafone partnership. Liberty will receive a cash payment of US$1.43 billion from Vodafone to equalize Liberty’s ownership stake in the venture, which analysts have valued at €3.5 billion (US$3.89 billion) after integration costs. Together, Liberty and Vodafone expect to achieve annual costs savings of approximately €280 million (US$310.8 million) through the venture. Both companies will also have the option of selling their respective stakes in the venture after four years. Contingent upon receipt of regulatory approvals, the parties expect to complete the transaction by year’s end. As Vodafone CEO Vittorio Colao anticipated “partnering with [Liberty] to create a fully integrated provider in one of our core European markets,” Liberty CEO Mike Fries lauded the venture as “a natural combination that makes perfect sense.”