Vodafone Group (NYSE:VOD, news, filings) did tell us they felt they had the resources to chase consolidation opportunities without selling its stake in Verizon Wireless. And today they proved that was not an idle threat, coming up with a €7.7B deal for Kabel Deutschland.
Vodafone had been said to be bidding against Virgin Global for the deal, which operates the second largest cable operator in Germany. But Vodafone apparently wanted it more. The purchase will give them a customer base of 8.5M households to go with their 32M wireless customers and pit them even more directly against the incumbent Deutsche Telekom with a broader portfolio of services.
Vodafone’s non-US assets have been under pressure for some time, and consolidation is one way to both gain scale and rationalize competition. On the other hand, the purchase of Germany’s largest cable operator will surely bring some large integration projects along with it. That might dampen their appetite for further M&A over the next few quarters, assuming Virgin Global doesn’t launch a competing bid or something.
The European consolidation playing field is getting warmer all the time, but with the exception of Vodafone’s C&W purchase last year it has mostly been aimed at consumer-focused assets. I’m expecting we’ll see infrastructure assets get more attention as well, and the current rumors around GTS Central Europe will be just the beginning.
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