The challenge in Germany, where Deutsche Telekom is investing in the build-out of fiber lines, is to win wireless and business clients in the face of competition from a combined Vodafone and Liberty Global, Telefonica SA and United Internet AG, which is emerging as a fourth large telecom carrier.
Vodafone Group Chief Executive Vittorio Colao said: "This transaction will create the first truly converged pan-European champion of competition". We are also committed to building on Vodafone's track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators.
Vodafone Romania is the second largest mobile provider, while UPC Romania is the second largest NGN (next generation network) operator in Romania, with 3.1 million homes passed (41% of total households), according to company figures.
The deal doesn't take Liberty Global out of Europe-it's still hanging around in the U.K., Ireland, Belgium, the Netherlands, Switzerland, Poland and Slovakia, and it will still be Europe's biggest cable provider-but it does take a lot of Europe out of Liberty Global. Denver-based Liberty Global operates in 12 European countries with cable-focused services and registered in London. Given the impact this transaction would have on competition, blanket approval of the deal by regulators would be "questionable", said Breko.
On May 9, British telecommunications company Vodafone announced it had acquired cable assets from American counterpart Liberty Global in four European countries.
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As a effect, there will likely be greater competition for Germany's current incumbent, Deutsche Telekom, and CEO, Tim Hoettges expressed concern back in February that such a deal would be "unacceptable" due to the creation of a monopoly in the cable TV market.
The transaction would see Vodafone acquire Liberty Global's operations in Germany, Hungary, Romania and the Czech Republic.
This is expected to comprise approximately 10.8 billion euros of cash and 7.6 billion euros of existing Liberty debt, subject to completion adjustments. With the new acquisition, Vodafone will be able to offer cable and fiber network, and to sell services and devices to 54 million homes in the 4 European Union countries. "This is one of those moments".
It will give Vodafone access to more than 54 million homes using fibre-optic broadband, providing it with the ability to sell its services to new customers, while driving efficiency savings by combining back-office and other functions. "It's time to alter market dynamics by unleashing greater investment and competition".
A breakup fee of €250 million, payable by Vodafone, has been agreed should the purchase fail. Liberty Global, listed in NY, fell 5.4% on Tuesday.