Vodafone, one of the world’s largest mobile communications companies, has offered to acquire Kabel Deutschland, the leading cable television provider in Germany, in a deal worth around £6.6 billion, which represents a four-fold increase in value since it went public in March 2010. The offer beats a rival bid from Liberty Global, which recently acquired Virgin Media and was looking to consolidate its position in Germany, where it owns Unity Media.
Kabel Deutschland will remain a separate legal entity within Vodafone group. The takeover is aimed at delivering growth in a rapidly changing telecommunications and television market, combining the respective strengths of the companies in fixed and mobile communications.
On completion, Vodafone will have 32.4 million mobile, 5.0 million broadband and 7.6 million television customers in Germany.
With relatively low penetration of pay-television in Germany, there is significant scope for growth.
“Kabel Deutschland has evolved into one of the most dynamic players in the sector,” said Adrian Hammerstein, its chief executive. “Together, we have the opportunity to become Germany’s leading telecommunications and television provider and to create what for the German market is a unique, winning combination of fixed line and mobile communications.”
Vittorio Colao, the chief executive of Vodafone said: “German consumer and business demand for fast broadband and data services continues to grow substantially, as customers increasingly access TV, fixed and mobile broadband services from multiple devices. The combination of Vodafone Germany and Kabel Deutschland will greatly enhance our offerings in response to those needs.”
In other words, the combined operation will be able to offer a bundled mix of television with fixed and mobile voice and data services, a combination that has proved to be a successful strategy elsewhere.
Vodafone is success story for British business. It was formed when the Racal Electronics Group won a cellular network licence for the United Kingdom in 1982 and called its network Vodafone to reflect the provision of voice and data services. In 2000, at the height of the dot com boom it acquired Mannesmann to become the largest mobile telecommunications company in the world.