Vodafone in asset swap talks with Liberty Global

Telecom giant Vodafone confirmed on Friday that it was in the early stage of talks with cable operator Liberty Global to exchange a number of assets, but has ruled out a merger between the two companies.

“There is no certainty that any transaction will be agreed, nor is there certainty with respect to which assets will ultimately be involved,” Vodafone said in a statement on Friday.

Any deal is unlikely to involve assets in India, or indeed assets outside Europe: in May Liberty Global Chairman John Malone told Bloomberg that Vodafone would be a “great fit” with his company, and that there were “substantial synergies” in Western Europe, pointing in particular at Britain, Germany and the Netherlands.

Vodafone has been building up its cable business in Europe, acquiring Spanish operator Ono last year, and Germany’s Kabel Deutschland in 2013.

Nasdaq-listed, London-headquartered Liberty Global has also been consolidating cable businesses across Europe, most recently acquiring Dutch firm Ziggo in 2014. In 2013, it acquired British media firm Virgin Media.

Vodafone shares fell around two per cent on Friday morning, following news that a more substantial deal was off the table.

Analysts at Deutsche Bank said that Vodafone’s developing global enterprise strategy made it unlikely that Vodafone would be willing to let go of major European assets such as Britain or Germany, making markets such as the Netherlands, Hungary and Romania likely assets in a swap (potentially giving Vodafone German and UK assets in return).

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