The controversial acquisition of Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania has added €18.4 billion to Vodafone Group’s debt mountain.
It is one of the biggest telecoms takeovers in the last ten years and makes Vodafone Europe’s biggest “converged” operator, the operator claims, with 54 million on-net cable and fibre households and an overall “next-generation network reach” of 124 million homes and businesses.
Some are viewing it as the beginning of a wave of consolidation in Europe – something that previously was generally opposed by pan-European and national regulators.
Prior to the acquisition, Vodafone Grou’s net debt stood at €27 billion at 31 March 2019.
Controversy
Vodafone’s Liberty Global deal finally received approval from the European Commission in mid-July, after it was first proposed in May 2018.
A number of parties tried to block the deal, claiming it was anti-competitive. After it was approved, subject to certain remedies, Deutsche Telekom, TV content providers and other network operators argued the measures still didn’t go far enough and said they were considering legal action.
Nick Read, CEO, Vodafone, said: “With the acquisition of Liberty’s assets in Germany and CEE, we have completed our transformation into Europe’s leading converged operator. Not only have we reshaped our business, becoming the owner of the largest gigabit-capable next generation network infrastructure in the region, we are now able to play our part in realising the digital society for millions of customers.”
At the Group’s earnings report in July, he said, “The acquisition targets expected cost and capex savings of €535million by the fifth full year post-completion, with an NPV [net present value, that is, the difference between the present value of cash inflows and the present value of cash outflows over a period of time] of at least €6 billion including integration costs.
“We have developed a detailed plan to deliver the customer benefits and capture the significant opportunities for value creation from the deal.”