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Vodafone to buy Liberty Global European assets for €18.4bn Vodafone to buy Liberty Global European assets for €18.4bn
(about 1 hour later)
Vodafone has agreed to pay €18.4bn (£16.1bn) for the majority of European assets owned by the US cable giant Liberty Global.Vodafone has agreed to pay €18.4bn (£16.1bn) for the majority of European assets owned by the US cable giant Liberty Global.
The UK telecoms group said it will buy businesses in Germany, Hungary, Romania and the Czech Republic.The UK telecoms group said it will buy businesses in Germany, Hungary, Romania and the Czech Republic.
Vodafone admitted in February that it was in talks with Liberty Global about a sale. The deal will allow Vodafone to expand its mobile, cable television and broadband services across Europe.
Liberty Global owns Virgin Media, which it plans to retain, as well as its operation in Ireland.Liberty Global owns Virgin Media, which it plans to retain, as well as its operation in Ireland.
Vodafone said that adding Liberty's cable TV and broadband services to its mobile operations would create a "converged national challenger" to the "dominant incumbent in Germany". Vodafone's share price rose by 1% to 209.8p after announcing the long-expected deal with Liberty Global, chaired by US billionaire John Malone, who is also the largest shareholder in the business.
It is Vodafone's biggest deal since its £112bn ground-breaking hostile takeover of Germany's Mannesmann in 2000.
Vodafone said the transaction, which includes Unitymedia in Germany, would create a "converged national challenger" to the "dominant incumbent" in the country.
Deutsche Telekom, which is Europe's largest telecoms provider by revenue and owns T-Mobile, has strongly objected to the move.Deutsche Telekom, which is Europe's largest telecoms provider by revenue and owns T-Mobile, has strongly objected to the move.
'Greater competition''Greater competition'
Deutsche Telekom's chief executive, Timotheus Höttges, said in February that the deal was "completely unacceptable".Deutsche Telekom's chief executive, Timotheus Höttges, said in February that the deal was "completely unacceptable".
He said: "I do not see that this kind of concentration in the cable market can be supported from regulatory bodies. He said: "I do not see that this kind of concentration in the cable market can be supported from regulatory bodies."
"I don't believe that Germany wants to go into a situation like Eastern European markets, where TV markets are dominated by telco players." However, Vodafone chief executive Vittorio Colao said on Wednesday that the deal "creates a strong competitor to Deutsche".
Vodafone already owns the largest cable business in Germany after it acquired Kabel Deutschland for €7.7bn five years ago.Vodafone already owns the largest cable business in Germany after it acquired Kabel Deutschland for €7.7bn five years ago.
Liberty Global is selling Unitymedia, which is Germany's second largest cable business, to Vodafone. By purchasing Unitymedia, it is acquiring Germany's second-largest cable operator.
On Wednesday, Mike Fries, chief executive of Liberty Global, said that Germany "is dominated by one provider that controls over half the broadband market". Vodafone's cable business operates in 13 of Germany's 16 federal states, while Unitymedia's operation covers the remaining three states.
He said: "As a result, innovation and investment lag other countries in Europe, impacting customer service, next-generation product deployment and broadband speeds. Mr Colao said that there was "no geographical overlap" between the two businesses.
"Even together, Liberty Global and Vodafone, whose cable networks don't compete or overlap, will be half the size of the incumbent operator. It's time to alter market dynamics by unleashing greater investment and competition." Mike Fries, chief executive of Liberty Global, said: "Even together, Liberty Global and Vodafone, whose cable networks don't compete or overlap, will be half the size of the incumbent operator. It's time to alter market dynamics by unleashing greater investment and competition."
Vodafone currently offers only mobile telecoms services in Hungary, Romania and the Czech Republic.
The acquisition of Liberty Global's cable business means it will be able to expand into TV and broadband services.
As part of the deal, Vodafone will pay Liberty Global €10.6bn in cash, which the US business said would "provide significant additional flexibility to optimise growth and shareholder returns".
Vodafone has also agreed to a €250m break fee, which would be payable to Liberty Global if the acquisition does not go ahead.