Vodafone buys into Pay TV with acquisition of Germany’s largest cable network operator
British telecoms giant Vodafone will acquire Kabel Deutchland for €7.7 billion (£6.6b), its biggest takeover in six years.
When complete, the deal will increase Vodafone’s customer base by 8.5 million and give Vodafone the necessary infrastructure and networks to offer a so-called “quad-play” service in Germany, including mobile phone, home broadband, home telephone and television, all from a single provider.
Vodafone’s rival Liberty Global, which recently acquired Virgin Media for £15 billion, was also bidding for Kabel Deutchland, but couldn’t match the €7.7 billion offer.
Earlier this month, Vodafone approached the company about a possible acquisition, proposing a deal worth £6 billion, but the offer was deemed too low.
Vodafone is the world’s second-largest mobile telecommunications company, measured by both subscribers and revenues. It owns and operates networks in over 30 countries and has partner networks in another 40.
Meanwhile Kabel Deutchland, which was founded as a spin-off from Deutsche Telecom in 1999, is the largest cable television operator in Germany. It offers around 100 Pay TV channels, fibre broadband and landline phone services.
Under the terms of the deal, which still needs to meet shareholder and regulator approval, Vodafone will pay €7.7 billion to acquire Kabel Deutchland, or €87 (£74) per share.
“This will instantly make Vodafone the largest Pay TV provider in the country and the second largest fixed broadband provider. Vodafone is already the second largest mobile telco in Germany with 32.4 million customers,” commented Emeka Obiodu, principal analyst at Ovum’s Industry, Communications & Broadband practice.
“Ovum expects mobile telecoms revenues in Germany to fall by a compound annual amount of one percent between 2013 and 2018. In fact, Ovum calculates that mobile revenues in Germany will only be about 87 percent of revenues in France. Yet, Germany will have 164 percent of the total number of mobile connections in France by end of 2013. And so, by adding Kabel Deutschland’s fixed broadband and Pay TV customers, Vodafone is hoping to tap into other sources of additional revenue in the market.”
Last year, Vodafone acquired the struggling UK telecoms company Cable & Wireless Worldwide (C&WW) for £1 billion.
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