Mobile giant Vodafone has opened talks with John Malone's US-based Liberty Global media and communications organisation to explore the potential for working together. This is bold step by the £63 billion UK business, but any chance of striking a mutually acceptable agreement will face intense scrutiny by regulators.
"Liberty Global, which acquired Virgin Media in 2013, generates the majority of its revenues from Western Europe ($15.7 billion out of a group total of $18.2 billion), and there would be a clear fit between the groups' UK, German (Vodafone acquired Kabel Deutschland in June 2013) and Netherlands operations," explains Mike Rogers, an analyst at IT and communications boutique, Megabuyte.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Satellite broadcaster Sky has paid close to £4.2 billion to retain the lion's share of Premier League football for the three years from 2016, and has expanded its own mobile service through a deal with O2. BT has also made great strides over the past couple of years, and looks likely to seal the £12.5 billion purchase of mobile network EE in Britain.
Vodafone has a limited broadband network via its £1 billion Cable & Wireless acquisition in 2012, and has recently begun a modest roll-out to homes; and it has limited content options. The mobile giant's tentative talks with Liberty Global would address both of these issues at a stroke, although the UK company has denied that any negotiations will result in an all-out bid for its US peer, an apparent hat tip to the tricky regulatory hurdles any deal must overcome.
Analysts at stockbroker Jefferies remain sceptical for several reasons. First, breaking up Vodafone's European footprint would run counter to the European Commission's stated industrial policy objective of creating European 'champions' with the scale to compete against global telecom/internet peers.
"We believe Vodafone is regarded as a pivotal asset by EU politicians," says Jefferies' Jerry Dellis.
Another obstacle is potential value destruction of a merger, or asset swap. "Losing its pan-European footprint could be a big blow to Vodafone, assuming its had to hand over operations in, say, the Netherlands, Romania and Hungary," says Dellis. Purchasing power could also be eroded, the analyst adds.
-
Confessions of a Brain Surgeon: an 'exceptional' documentaryThe Week Recommends Retired neurosurgeon Henry Marsh reflects on his pioneering work with exquisitely 'raw honesty'
-
A new subtype of diabetes was found and it may require different treatmentUnder the radar It is prevalent in Black Africans and Americans
-
Crossword: August 20, 2025The Week's daily crossword
-
Vodafone: a great British corporate declineBusiness Briefing CEO Nick Read has been given the boot after shares tumbled 40% to their lowest price this century
-
Vodafone scraps home broadband rental feesSpeed Read Company becomes first to stop separating charge ahead of rules change in October
-
Vodafone complaints surge after billing switch
Speed Read Company remains the most complained about mobile network in the UK, says Ofcom
-
Vodafone customers told to be 'vigilant' after data breachSpeed Read Company says almost 2,000 customers' accounts were accessed using information acquired from a third party
-
Phones 4u collapse: jobs saved after EE agrees to buy shopsIn Depth EE, blamed by Phones 4u for precipitating its downfall, to save the day – with Vodafone
