Vodafone Trying to Acquire Kabel and Thinking 4-Play
Vodafone (NASDAQ:VOD) has acquisitions of its own in its sights. The British mobile carrier that Verizon (NYSE:VZ) wants to buy out is trying to purchase Kabel Deutschland, Germany’s biggest player in cable market, in an attempt to lock down the fourth dimension of the quad-play suite it would market to European customers. Analysts believe it wouldn’t impact the attempt by Verizon to purchase Vodafone’s stake in Verizon Wireless.
Vodafone has already bid once for Kabel Deutschland and been rejected, according to a report by Reuters. The initial bid by Vodafone, of 81 euros per share, was deemed too low by the German cable provider, which indicated it would listen when the offer was 90 euros or above. Vodafone is apparently taking the response in stride and planning to put together a second bid soon. Talks are being described as amicable on all sides.
If Vodafone were able to land Kabel Deutschland, it would have the opportunity to put together quad-play bundles for its European customers. Quad-play packages add mobile capabilities to the triple-play offerings of television, home phone and Internet like Verizon and AT&T (NYSE:T) offer U.S. customers. Quad-play packages are gaining in popularity and giving telecom companies a major bargaining chip with consumers. Though Vodafone would have to take on debt to complete the deal, analysts don’t believe it would force the company to sell its share in Verizon as a result.
Jeffries analyst Jerry Dellis recently wrote, “Funding Kabel would not compel a Verizon Wireless sell-down in our view.” Dellis noted access to Verizon’s dividend stream would be important moving forward. Vodafone CEO Vittorio Colao had previously mentioned the company could make acquisitions and keep its share of Verizon without issue.
Meanwhile, Sprint (NYSE:S), the third-largest wireless carrier in the U.S., is still the target of Softbank, a deal that has faced resistance but was recently endorsed by Egan-Jones following the increase in Softbank’s bid price. Consolidation is certainly in the air in the wireless industry, both stateside and in Europe, and quad-play appears to be the next step toward asserting dominance in either region.
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