Liberty Global, Vodafone Merge Dutch Operations

As expected, Liberty Global and Vodafone have agreed to merge their operations in the Netherlands in a 50-50 joint venture valued at $29.2 billion that will combine Vodafone’s wireless communications assets in the country with LGI’s video, broadband and business services.

The JV will operate under both the Vodafone and Ziggo brands and will create a nationwide integrated communications provider with over 15 million revenue generating units – 4.2 million video, 3.2 million broadband, 2.6 million fixed line telephony and 5.3 million mobile customers.

As part of the deal Vodafone will make a $1.1 billion cash payment to LGI to equalize ownership in the JV.

Liberty Global and Vodafone have been talking on and off about an asset swap for several months, but talks broke down in September, reportedly on valuations. They were restarted in early February, which Vodafone confirmed in a statement, but provided no details.

The venture will strengthen LGI’s Ziggo cable, phone and broadband service in the Netherlands by giving the operators a strong wireless component.  The deal is expected to close by the end of the year.

“This powerful combination of the best fixed and mobile networks in the Netherlands will deliver huge benefits to Dutch consumers and businesses,” Liberty Global CEO Mike Fries said in a statement. “Throughout Europe, Liberty is capitalizing 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.”

The deal also fuels hopes that the two companies could possibly move forward in the future on a broader combination. But, according to a report in the Financial Times, the two have insisted that the Dutch talks have not included discussions about any other parts of their respective businesses.

Both have pledged that the combined JV will invest in digital infrastructure, entertainment services and productivity for Dutch consumers.

“Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole,” said Vodafone Group CEO Vittorio Colao in a statement. “This transaction marks a continuation of Vodafone’s market‐by‐market convergence strategy and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”