Deal will join Liberty Global, Vodafone operations in Netherlands
U.K-based telecom group Vodafone and U.S. company Liberty Global reached an agreement to merge their operations in the Netherlands.
Vodafone will make a cash payment to Liberty Global of €1 billion ($1.43 billion) to equalize ownership in the joint venture. The JV will operate under both the Vodafone and Ziggo brands, and is set to create a nationwide integrated communications provider with more than 15 million revenue generating units, of which 4.2 million are video, 3.2 million are high-speed broadband, 2.6 million are fixed-line telephony and 5.3 million are mobile.
The transaction, which is subject to regulatory approvals, is expected to close around the end of this year.
“The combination of Vodafone’s mobile business with Ziggo’s broadband and TV business creates a strong and competitive integrated communications player,” Vodafone Group’s CEO Vittorio Colao said. “This transaction marks a continuation of Vodafone’s market-by-market convergence strategy and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”
The two operators said the JV is expected to generate significant efficiencies with run-rate cost and capital expense synergies of €280 million on an annual basis by the fifth full year post closing. The key expected sources of cost and capex savings include the use of existing infrastructure to provide services for each entities’ customers at lower cost compared to standalone capabilities; the combination of regional and national network infrastructures and IT systems; the reduction in combined marketing expenditures; the potential to reduce general and administration costs; and site rationalization.
Vodafone ended 2015 with 5.06 million mobile subscribers in the Dutch market, according to the company’s latest financial report. The telco offers LTE services through the 800 MHz, 1800 MHz and 2.6 GHz spectrum bands.
Earlier this month, The European Commission capproved the acquisition of Belgian mobile operator BASE by Liberty Global. In April 2015, Liberty Global’s Belgian subsidiary Telenet agreed to acquire BASE for 1.33 billion euro (currently $1.48 billion) from Dutch telecom operator KPN. The European Commission said final approval is conditioned on the implementation of commitments to ensure effective competition in the Belgian mobile market.
