What's going on?
On Wednesday, Vodafone (the world’s second-largest mobile operator) dialed up a deal to acquire some of American telecoms giant Liberty Global’s European cable TV businesses – for a signal $22 billion!
What does this mean?
Liberty Global’s businesses in Germany, the Czech Republic, Romania and Hungary are all on the line in a deal which has been ringing for some time (perhaps a trend among telecoms companies). And the call may yet be dropped, as a lengthy regulatory review process awaits.
Vodafone hopes that the deal will catapult it from also-ran status in Central European markets to that of a leading player. It’s a similar rationale to the recent deal between T-Mobile US and Sprint, but with a key difference…
Why should I care?
For you personally: Europeans should be picking up a good deal.
Instead of forthcoming infrastructure investments driving its thinking, Vodafone is likely focused on the deal allowing it to become a “quad-play” provider in prosperous Germany. Offering Jannik and Josefine TV, phone, internet and mobile services in one big Bündel should help Vodafone extract more euros from its customers, who should also get a good deal since all-in-one services are typically discounted.
For markets: What’s good for Vodafone may not be good for its German neighbor.
Vodafone’s stock rose by 1% on Wednesday (even though buyers’ shares usually fall on such news). Investors likely connected with the idea of Vodafone’s broader reach making it more competitive – with a full battery of synergies to boot. But the stock of German market leader Deutsche Telekom fell by 2% as the company’s CEO criticized the deal. His belief that the acquisition would result in a German cable TV monopoly (and thus be blocked by competition regulators) may have smacked of wishful thinking, given Deutsche T’s own groß audience.