Liberty Global has given up efforts to acquire Kabel Deutschland, recently the target of a €7.7 billion ($10.1 billion) offer from Vodafone, and will instead focus takeover efforts on the southern Europe region, reports Bloomberg.
Liberty’s (Meridian, CO, USA) interest had forced Vodafone (Newbury, UK) to raise the price of its original offer but the UK operator now looks free to complete its move for Germany’s biggest cable company later this year.
John Malone, the chairman of Liberty Global, told Bloomberg that northern Europe presented few opportunities for further consolidation.
In any case, regulatory authorities may well have blocked a takeover of Kabel Deutschland (Unterfoehring, Germany) by Liberty Global, which already owns Unitymedia, Germany’s second biggest cable company.
Vodafone, by contrast, owns no cable assets in Germany and is looking to the deal to strengthen its position in Germany’s broadband and television markets.
So far, the operator has relied largely on wholesale agreements with Deutsche Telekom (Bonn, Germany), the incumbent, to provide fixed-line services.
Indeed, not long before it announced its bid for Kabel Deutschland, Vodafone had signed an agreement to use a new bitstream service based on Deutsche Telekom’s rollout of VDSL and vectoring technology.
That service, however, gives Vodafone little opportunity to innovate and provide higher-speed broadband services because it is largely dependent on moves made by Deutsche Telekom.
In December last year, the German incumbent announced plans to spend €6 billion on the rollout of fixed-line and mobile broadband networks as it looks to reclaim territory lost to Kabel Deutschland and Unitymedia.
Both the cable rivals are able to provide faster connection speeds to their customers than are possible over Deutsche Telekom’s copper-based infrastructure.
VDSL and vectoring should make it more competitive but some analysts think Deutsche Telekom should be investing in an FTTH network to prevent cable companies from extending their lead in future.