Wired News –Vodafone Solidifies Presence in Europe with Acquisition of Liberty Global’s Operations in Germany, Hungary, Romania and The Czech Republic

LONDON, UK / ACCESSWIRE / May 11, 2018 / If you want access to our free research report on Liberty Global PLC (NASDAQ: LBTYA) (NASDAQ: LBTYB) (NASDAQ: LBTYK), all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=LBTYA as the Company’s latest news hit the wire. On May 09, 2018, the Company announced that it has signed an agreement with Vodafone Group PLC (NASDAQ: VOD) which has agreed to acquire the Company’s operations in Germany, Hungary, Romania, and the Czech Republic. The deal has a total enterprise value of €19.0 billion (approximately $22.7 billion) on US GAAP basis and €18.4 billion (approximately $22 billion) on an EU-IFRS basis. Register today and get access to over 1,000 Free Research Reports by joining our site below:

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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Liberty Global and Vodafone Group most recent news is on our radar and our team decided to put out a fantastic report on the company that is now available for free below:

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Commenting on the divestment, Mike Fries, CEO of Liberty Global, said:

“The transaction appropriately values our core cable operations at a double digit OCF multiple and will deliver €10.6 billion ($12.7 billion) of estimated cash proceeds to Liberty Global. Plus, we will retain all cash generated from the four businesses through closing.”

He further added:

“In each of these markets, the combination of Liberty Global and Vodafone’s businesses will transform the competitive landscape and bring a new level of convergence to customers. Now more than ever, Europe needs strong competition from scaled national challengers willing and able to invest in next-generation wireless, video and broadband services.”

Vittorio Colao, Chief Executive of Vodafone Group, added:

“This transaction will create the first truly converged pan-European champion of competition. It represents a step change in Europe’s transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders.”

Details of the transaction

The operations being divested by Liberty Global includes Unitymedia GmbH (Unitymedia) in Germany and Liberty Global’s operations (excluding its “Direct Home” business) in the Czech Republic (UPC Czech), Hungary (UPC Hungary), and Romania (UPC Romania). The enterprise value of €18.4 billion on EU-IFRS basis paid by Vodafone includes approximately €10.8 billion in cash and assumption of €7.6 billion of existing debts of Liberty Global.

The four divested operations represent approximately 28% of Liberty Global’s consolidated 2017 operating cash flow but does not include its 50% share of OCF from the VodafoneZiggo’s joint venture in the Netherlands.

The deal is expected to close in mid-2019 and is subject to regulatory approvals from the European Commission. However, the deal does not require approvals from shareholders of both companies. The agreement has a provision for a breakup fee, wherein Vodafone will pay €250 million to Liberty Global if the deal is not completed under certain circumstances.

Vodafone plans to finance the deal using a mix of cash in hand, fresh debt, and approximately €3 billion in convertible bonds.

Liberty Global has not finalized how it will allocate the funds from the divestment as there is huge time gap from the time of signing of the agreement to actual realization of funds. However, it expects that the deal will give it the financial flexibility to optimize growth and shareholder returns. During the transition period, Liberty Global has agreed to provide certain transitional services for a maximum of four years and Vodafone will decide the annual charges for the same based on actual requirements. These services are mostly related to network and information technology-related functions. The Company plans to discontinue financial reporting for the divested operations from the start of Q2 2018.

After the completion of the divestments, Liberty Global’s European operation will include UK, Ireland, Belgium, Switzerland, Poland, and Slovakia where it will continue to provide services like cable television, video, broadband, fixed-line telephony, mobile, etc. The combined operations in these countries reach 24 million homes, account for 26 million video, broadband and fixed-line telephony subscribers and 6 million mobile services. Additionally, the Company has 50% ownership in JV in the Netherlands – VodafoneZiggo, which has 4 million customers subscribing to 10 million fixed-line and 5 million mobile services.

Benefits of the acquisition for Vodafone

For Vodafone this is a significant acquisition and has long reaching impact as it allows the Company to compete directly with dominant, local telecommunications firms in the said regions. The case is especially applicable in Germany where it will emerge in direct competition to Deutsche Telekom as Unitymedia is the second largest cable operator in Germany.

The deal will allow Vodafone to become the leading telecom Company in Europe with coverage across 54 million homes with cable and fiber subscriptions and an NGN (next generation network) reach to over 110 million homes and businesses.

The transaction is expected to result in cost and capital synergies of over €535 million per annum by the fifth year of closing the deal. Vodafone also expects to incur total integration costs of approximately €1.2 billion which will be spread over the first 5 years of closing the deal.

The transaction is of great importance to Vodafone, primarily in Germany. Vodafone is confident of upgrading around 25 million cable households to Gigabit-speed connections in just four years. This represents two-thirds of the German government’s ambition of Gigabit connectivity across Germany by 2025. Vodafone will emerge as the second strong contender for providing digital infrastructure in the German market and provide effective competition and choice in digital infrastructure and converged services which will be highly beneficial to German consumers and businesses.

Vodafone plans to accelerate the availability of converged fixed, mobile, and TV services in the Czech Republic, Hungary, and Romania. Vodafone aims to expand its NGN coverage by 33% of homes in the Czech Republic, 43% in Hungary, and 41% in Romania, reaching a total of 6.4 million homes. The Czech Republic, Hungary, and Romania regions have a broadband penetration of around 28% which represents a major growth option for the Company to expand its services.

About Liberty Global PLC

London, UK-based Liberty Global is the world’s largest international TV and broadband company. It has operations in 11 European countries under the Virgin Media, Unitymedia, Telenet, and UPC brands. Its network connects 22 million customers subscribing to 46 million TV, broadband internet and telephony services. It also has 7 million mobile subscribers and offers Wi-Fi service through 12 million access points. The Company owns 50% stake in VodafoneZiggo, a joint venture in the Netherlands with 4 million customers.

About Vodafone Group PLC

London UK-based, Vodafone is a global telecommunications conglomerate that provides a range of services including voice, messaging, and data across mobile and fixed networks. The Group’s mobile operations are spread across 25 countries, plus it partners with mobile networks in 46 more, and fixed broadband operations in 18 markets.

Vodafone Group had 529.1 million mobile customers and 19.3 million fixed broadband customers, including India and all the customers in Vodafone’s joint ventures and associates as on December 31, 2017.

Stock Performance Snapshot

May 10, 2018 – At Thursday’s closing bell, Liberty Global’s stock advanced 1.52%, ending the trading session at $30.80.

Volume traded for the day: 2.64 million shares, which was above the 3-month average volume of 2.13 million shares.

Stock performance in the previous six-month period – up 0.85%; and past twelve-month period – up 1.92%

After yesterday’s close, Liberty Global’s market cap was at $26.12 billion.

The stock is part of the Services sector, categorized under the CATV Systems industry. This sector was up 0.5% at the end of the session.

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