Vodafone ‘in takeover talks’ for German cable firm

Raises spectre of selling stake in US venture to raise cash

Vodafone is the latest telco to enter the frenzy of deal making, with rumours the operator might be mounting a bid for Germany’s biggest cable operator Kabel Deutschland. Vodafone is thought to be in talks with the firm whose market cap soared to €8.9 billion yesterday [13th February 2013] after word that it might be bought sent its shares up almost nine per cent.
If acquired, it would allow Vodafone to sell lucrative bundles of mobile, fixed-line and TV services across Europe, buttressing otherwise declining revenues from its mobile stream.

A bid for Kabel Deutschland would also allow Vodafone to spend some of the billions it might accrue in dividends granted through US partner Verizon Wireless.

Another scenario is that Verizon Communications, which owns just over half of the US venture with the UK carrier, might want to buy Vodafone’s 45 per cent stake – providing it with an even bigger cash bonanza that could be used elsewhere.

“Vodafone have said they have a convergence strategy that includes M&A and they have indicated that they are interested in fixed assets,” said Espirito Santo telecoms analyst Nick Brown.

“Liberty Global potentially could counter bid, but now may still be a good time for Vodafone to make an offer.”

But he also warned that a Vodafone-Kabel Deutschland tie-up could prompt scrutiny from Germany’s antitrust watchdog.

Vodafone already has around 3.4 million internet customers in Germany through its ownership of Arcor, but unlike its European competitors is focused on mobile operations, limiting its ability to offer package deals and offload data traffic onto its own fixed line networks.