Although Vodafone is considering taking over Liberty Global, it has concerns about what would be the combined company’s debt levels, as well as the reaction of its own investors to any deal.
Bloomberg reports that no formal negotiations between the two companies are yet under way, with valuation and regulatory issues being among the key obstacles.
At this stage, Vodafone is holding internal deliberations and analysing financial and regulatory hurdles, as well as investor support, to what would be a share-based transaction.
The case for a deal between the two companies is strengthened by developments elsewhere in the market, with BT having entered into talks in the UK to buy either EE or Telefonica’s O2.
Vodafone has recently made a number of high-profile acquisitions including Kabel Deutschland and Ono, while Liberty is the undisputed market leader in the European cable industry as a whole, with interests that include Virgin Media and operators in five CEE countries.
Meanwhile, Reuters reports that Vodafone made an approach to Liberty earlier this year but was deterred by price expectations.
It adds that the company is also looking at other possible acquisitions, including TalkTalk.
However, a deal with Liberty would make the most sense.
One of the main obstacles to a deal would be the regulatory obstacles it would face, especially in Germany, the UK and Netherlands.
Even so, as previously reported in Broadband TV News, Liberty has already indicated it would consider the take-over of its cable assets in Germany by Vodafone, believing it would not be opposed by the competition authorities.