Vodafone, Liberty are “a great fit”, says John Malone

Vodafone, Liberty are “a great fit”, says John Malone

20 MAY 2015

A Bloomberg interview with Liberty Global chairman John Malone revived talk of a possible merger with Vodafone, although the cable industry veteran cautioned about “philosophical” obstacles to any deal.

Malone (pictured) described Liberty and Vodafone’s cable interests in Europe as “a great fit”, citing in particular the UK, Germany and the Netherlands.

In the UK, for example, a combination of Global’s Virgin Media and Vodafone’s mobile interests would act as a counterweight to the proposed BT/EE entity.

His comments will reinvigorate speculation from end-2014 about a merger between the two companies.

Malone did not comment on whether the companies are in discussions.

“We’ve looked at that from our side and there would be very substantial synergies if we could find a way to work together or combine the companies with respect to western Europe,” he added.

Vodafone’s adoption of a quadplay strategy over the last two years has seen it move aggressively into acquisition mode, including Germany’s Kabel Deutschland and Spain’s Ono. Most recently, it was linked to a possible bid for Portugal’s Cabovisao.

For its part, Liberty Global has moved in the opposite direction, adding mobile services to its fixed portfolio. For instance, Telenet Global Holding, a Liberty subsidiary, recently acquired Belgian mobile operator BASE.

Vodafone’s equity is valued at about $93 billion, compared with $45 billion for Liberty Global. Include debt and the cable giant has an enterprise value of about $88 billion.

However, Malone cautioned that from an investors’ perspective, there are “huge differences” in how the two companies are run.

“The principal barrier to us, and I’m talking philosophically here — I’m not making an offer to anybody — philosophically, you have a different view of how a large company should capitalise itself,” Malone said.

“Their philosophy is low leverage, low risk and high cash payout to their shareholders. I prefer to grow equity value.” Either party would have to undergo philosophical adjustment for a deal to happen.

Author

Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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