Deutsche Telekom-owned T-Mobile Austria announced an agreement to acquire Liberty Global’s cable unit UPC, in a deal intended to help it compete more aggressively with market leader Telekom Austria.

In a statement, T-Mobile Austria said the tie-up would see it transform from a mobile operator into an integrated provider, with “strong mobile and fixed infrastructure to meet growing demand for broadband internet access”.

“The acquired cable network will be a perfect match with our best mobile network. It will allow customers to benefit from extended scope of services with fixed and mobile offerings from one source,” said Srini Gopalan, board member for Europe at Deutsche Telekom.

For Liberty Global, divesting in Austria could set the stage for the company to again revisit merger talks with Vodafone Group.

According to Financial Times sources, the move in Austria is part of a broader restructuring effort aimed at preparing for talks with Vodafone. The companies held talks in the past about creating a global telecoms and cable giant, but were unable to thrash out a deal.

“Integrated quad-player”
Combined, T-Mobile Austria and UPC will have 6.7 million subscribers in mobile and fixed internet, telephony, TV, video and entertainment services. Combined revenue in 2017 would be €1.2 billion.

T-Mobile Austria added that as a strong convergent supplier, the integrated company can prove a strong competitor to the current market leader Telekom Austria’s A1.

The company also said it would boost its coverage in urban areas, as well as continue to invest “massively” in LTE and 5G.

T-Mobile Austria CEO Andreas Bierwirth said the deal would help the company towards its long-term goal in the country. “We want to be number one in Austria in terms of speed, service and content.”

In its own statement, Liberty Global said that the €1.9 billion enterprise value represented a multiple of nearly 11x on UPC’s estimated 2017 adjusted operating cash flow, and the company intends to use the proceeds for general corporate purposes, including possible re-investment into the business.

“We remain focused on value creation for our shareholders and are pleased with the premium valuation being attributed to one of our smaller operating markets,” added Mike Fries, Liberty Global CEO.

The acquisition still requires regulatory approval, and is expected to close in the second half of 2018.