Vodafone agreed to acquire Liberty Global’s operations in Germany, Hungary, Romania and the Czech Republic in a deal valued at approximately €19.0 billion ($22.7 billion). The combination is also notable for bringing together mobile infrastructure with cable operations.
Vodafone said the acquisition accelerates its convergence story and strengthens its position as a leading next generation infrastructure owner in Europe. After the merger is complete, Vodafone will have 54 million cable/fibre homes ‘on-net’ and a total NGN reach of 110 million homes and businesses, including wholesale arrangements.
In Germany, the combination of Vodafone and Unitymedia’s non-overlapping regional operations will establish a strong second national provider of digital infrastructure in the German market. The ambition is to bring Gigabit connections to around 25 million German homes (62% of total German households) by 2022.
In eastern Europe, the Liberty Global properties will complement Vodafone’s existing mobile operations in the Czech Republic, Hungary and Romania. In these markets, the combined businesses will reach over 6.4 million homes (39% of total households) and will serve 15.8 million
mobile, 1.8 million broadband, and 2.1 million TV customers.
Liberty Global said these four businesses represent approximately 28% of its consolidated 2017 operating cash flow (OCF), not including its 50% share of OCF from the VodafoneZiggo joint venture in the Netherlands. After completion of the transaction, Liberty Global will continue to be Europe’s leading cable television and broadband provider, with consolidated operations in the United Kingdom, Ireland, Belgium, Switzerland, Poland
and Slovakia. Together, these country operations reach 24 million homes, account for 26 million video, broadband and fixed-line telephony subscribers
The sale price represents a total enterprise value for all four businesses combined of 11.5 times 2017 adjusted Segment OCF, or approximately 24.0 times 2017 operating free cash flow (“OFCF”), with an implied adjusted Segment OCF multiple for Liberty Global’s German operation of 12.0 times.
“This transaction will create the first truly converged pan-European champion of competition. It represents a step change in Europe’s transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders. We are committed to accelerating and deepening investment in next generation mobile and fixed networks, 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 will become Europe’s leading next generation network owner, serving the largest number of mobile customers and households across the EU.”
