Consolidation in the European telecommunications marketplace rolled into the Netherlands today. After talking about asset swaps and such on and off for many quarters, Vodafone and Liberty Global have finally followed through somewhere. The two companies have announced an agreement to combine their Dutch operations in a new joint venture that will look to take on the incumbent, KPN.
Vodafone will be paying $1.1B to Liberty Global, a sum which will make the two equal partners in the new entity. Liberty operates Ziggo, the Netherlands' biggest cable operator, while Vodafone's Dutch mobile unit holds the second second slot in that segment behind KPN. Thus, Vodafone gains an access network while Liberty adds mobile to its portfolio. The JV will start out with revenues of about €4.4B, and expects to realize some €280M in annualized synergies by the full fifth year. Integration expenses should be in the €350M range, most of which will come in the first three years.
Vodafone says the arrangement ought not be seen as a template for similar moves in other countries, but as a one time thing. That probably won't stop speculation that the two could still be planning further actions, as analysts consider the wider potential synergies to be substantial.
Further M&A activity in the Netherlands itself seems likely, and this move by Vodafone and Liberty may trigger action on other fronts. DT has been looking to sell T-Mobile Netherlands for some time, with private equity sitting on the other side of the table, while Tele2 is said to be seeking a way to scale things up.
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