The UK’s Vodafone has completed its €7.7 billion ($10.43 billion) takeover of Kabel Deutschland, according to a statement on the German cable company’s website.
The deal puts Vodafone (Newbury, UK) in control of 76.57% of Kabel Deutschland’s (Unterfoehring, Germany) shares and will aid its push into Germany’s high-speed broadband market and allow it to better compete against telecoms incumbent Deutsche Telekom (Bonn, Germany) on bundled packages that include fixed, broadband and mobile services.
Vodafone is still required to enter into a “domination and profit and loss transfer agreement” with Kabel Deutschland, as required by German law, but this appears to be a formality.
The UK-headquartered operator recently lost its leading position in Germany’s mobile market to a resurgent Deutsche Telekom, and is now threatened by a possible merger between Telefonica (Madrid, Spain) and KPN-owned E-Plus (The Hague, Netherlands) – the two smaller players – that has yet to secure regulatory approval.
In the fixed market, meanwhile, Vodafone is heavily dependent on a wholesale arrangement with Deutsche Telekom because it lacks the infrastructure needed to be entirely self-reliant.
As Germany’s biggest cable company, Kabel Deutschland was obviously an enticing prospect, with a strong position in both the broadband and television sectors.
Indeed, Deutsche Telekom has struggled to match its cable rivals on broadband connectivity speeds and has continued to lose market share to the likes of Kabel Deutschland and number-two player Unitymedia (Koln, Deutschland).
That prompted the operator to propose a new broadband investment program at an investor day in late 2012, and the scheme recently won the backing of European regulatory authorities.
Naturally, a merger between Vodafone and Kabel Deutschland raises questions about Vodafone’s existing wholesale deal with Deutsche Telekom.
Deutsche Telekom, however, has been relatively sanguine on that front, noting that Kabel Deutschland has a weak presence in parts of the country and that Vodafone’s merger will pose plenty of operational challenges in the short term.