Vodafone Eying €2.8 Billion Take-Over of German Cable TV Operator

Vodafone is reported to be in talks which could lead to a €2.8 billion take-over of the German cable TV operator, Kabel Deutschland (KDG). The company is currently owned by the private equity group, Providence - which brought the company three years ago.

KDG has around 11 million customers in Germany and would be a good fit with Vodafone's local landline subsidiary, Arcor which controls about 14% of the broadband market.

KDG announced increased second quarter revenues last week, by 15.4% to €339.3 million while EBITDA increased 30% to €142.9 million. The higher numbers are partly attributable to the networks acquired earlier this year from the Orion Cable Group.

The firm recently confirmed that it was taking another look at trying to acquire some smaller regional operators. In 2004 KDG tried to buy two cable operators serving regional areas, which would have given the company nationwide coverage, but the deal was blocked by the cartel office amid fears of the company gaining a dominant market position. Changes in the market place with the emergence of telcos providing TV services should make cartel fears easier to overcome.

“A nationwide cable operator would enhance competition vis-à-vis the large telephone incumbents which would also be in the best consumer interest. We want to play a leading role in any such market consolidation,” KDG's CEO, Adrian v. Hammerstein said when the company announced its financial results last week.

Kabel Deutschland was founded in January 1999 by Deutsche Telekom, after it was ordered to spin off its entire cable TV business as required by regulatory terms.

For historic reasons, Kabel Deutschland cannot offer its products directly to all are connected via Kabel Deutschland's network, since only one third of all viewers are direct customers. In the early 1980s, when the cable network was originally established, Kabel Deutschland's predecessor Deutsche Bundespost had to leave in-house cables to other companies or the house owners. This turned out to be a significant obstacle since Kabel Deutschland now has to make single contracts with hundreds of small cable operators.

Resource - cellular-news

MTS and Vodafone Sign Strategic Partnership

Moscow, Russian Federation, and London, UK – Mobile TeleSystems OJSC (“MTS” – NYSE: MBT), the largest mobile phone operator in Russia and the CIS, and Vodafone today announce a strategic, non-equity partnership to provide customers with high quality communications services and to collaborate jointly on future technological developments.

Under the agreement, MTS will be able to draw on Vodafone’s expertise in building and developing third generation (3G) networks and mobile broadband products, working with leading global equipment providers and deploying innovative CRM practices to enhance quality and further improve the efficiency of its operations. In addition, MTS will have an exclusive access to a range of products, services and devices from Vodafone for its markets of operation in Russia, Ukraine, Uzbekistan, Turkmenistan and Armenia.

The partnership with MTS will give Vodafone valuable insight into the opportunities of the important telecommunications markets of Russia and the CIS, which are among the fastest growing in the world. Vodafone’s products will be made available to MTS’ 87 million subscribers, including more than 60 million customers in Russia.

Vodafone's products and services will be marketed in Russia and the CIS under a co-branded approach. Vodafone will also open a representative office in Moscow to co-operate more closely with MTS on future offerings and customer services.

“A partnership with Vodafone will allow MTS to bring tangible benefits to both its customers and shareholders,” said Mr. Mikhail Shamolin, President and CEO of MTS. “This groundbreaking agreement will give our customers the most innovative products and services from around the world. At the same time, Vodafone’s commercial insights and technical expertise will translate into significant operational efficiencies for MTS over the long-term as we transition our networks to 3G and beyond.”

Mr. Vittorio Colao, CEO of Vodafone, commented: “Our agreement with MTS is an opportunity for Vodafone to build its presence and work with the leading operator in these important markets. By combining the geographical reach of the company’s respective networks, we can give customers greater roaming capabilities and extended coverage. We are delighted that MTS has joined our successful Partner Markets community, which will be much stronger with the addition of Russia and the CIS.”

Resource - UMTS Forum