The telco M&A saga rumbles on. After BT agreed to buy EE and Telefonica inked a deal to sell O2 to Three owner Hutchison Whampoa, eyes turned to two of the other big players, Vodafone and Liberty Global.
The latter's chairman John Malone, known as the 'Cable Cowboy', had been keen to sign some kind of deal with Vodafone; potentially a full-blown merger, but more likely an asset swap. But that was put into doubt yesterday when he admitted things weren't going quite to plan.
'Conceptually there could be some real value created but realistically we haven’t been able to figure out a way to do that that’s mutually successful,' the Montana-based entrepreneur told Bloomberg. 'That doesn’t mean that we won’t find a solution, nor does it imply that we will.'
On the face of it, some kind of deal would make sense. In the UK market, for example, telcos have been racing to provide 'quad-play' packages, that combine TV, broadband, phone and mobile contracts in one. If it can't acquire Virgin Media's well-established TVs service, Vodafone will have to build up its own version, or else risk being left behind. Virgin's broadband business, much larger than Vodafone's, would be an asset too. In Germany, Liberty would be keen to get hold of the market-leading TV operator Kabel Deutschland, which was bought by Vodafone in 2013.
But Vodafone boss Vittorio Colao, has appeared much less enthusiastic about a tie-up than Malone. While the Cable Cowboy had talked up the chance of a total merger, Vodafone has made it clear it's more interested in something less full-on. 'Vodafone is not in discussions with Liberty Global concerning a combination of the two companies,' it said in June.
Malone appeared to have given up on a merger yesterday. 'Obviously there’s a price at which Liberty Global could be bought,' he said. 'I don’t believe that that’s likely for the other side to get there -- an outright purchase of the whole company.'
Ultimately it's regulators that could be the biggest obstacle to a deal, as competition authorities across Europe have been reluctant to approve telco M&A moves. A proposed tie-up of the Danish operations of Norway's Telenor and Sweden's Teliasonera was blocked by the EU Commission earlier this month, and the Competition and Markets Authority is still deliberating BT's EE acquisition. Vodafone and Liberty might eventually come to an agreement, but it's going to be a long time before the Cable Cowboy can ride off into the sunset.