Liberty Global and Vodafone plan to create a 50/50 joint venture in the Netherlands, combining the Ziggo cable network and Vodafone’s mobile network.
The news follows months of speculation about a possible merger or take-over, and the creation of a Dutch JV can be seen as a first move towards a closer relationship between the two companies.
Liberty Global owns and operates the country’s largest cable operator, Ziggo, while Vodafone is the second largest mobile operator, after incumbent KPN.
News about a possible join venture was broke early February when Vodafone confirmed it is in discussions with Liberty Global.
Based upon the enterprise value of each business, and after deducting Ziggo’s €7.3 billion of net debt, Vodafone will make a cash payment to Liberty Global of €1 billion to equalise ownership in the joint venture. Vodafone Netherlands will be contributed on a debt and cash free basis.
The transaction is expected to close around the end of 2016 and is subject to regulatory approvals and consultations with the Works Councils.
“The combination of Vodafone’s leading mobile business with Ziggo’s successful broadband and TV business creates a strong and competitive integrated communications player, which will invest in digital infrastructure, entertainment services and productivity applications for Dutch consumer, business and public sector customers,” said Vodafone Group Chief Executive, Vittorio Colao, in a statement.
“Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole. This transaction marks a continuation of Vodafone’s market-by-marketconvergence strategy and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”
Mike Fries, CEO of Liberty Global, said, “This powerful combination of the best fixed and mobile networks in the Netherlands will deliver huge benefits to Dutch consumers and businesses. Throughout Europe, Liberty is capitalising on the rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity.
“Soon,both Ziggo and Vodafone customers in the Netherlands will be at the forefront of this new world, and we couldn’t be more excited about our partnership with Vodafone. We look forward to working together to develop cutting-edge converged services for the Dutch market.”
Ziggo serves about 90% of the country with its cable network, with 4,139,800 connected TV homes.