Telecommunications company Vodafone and broadband provider Liberty are merging in the Netherlands, forming a joint fifty-fifty venture to create a more centralised offer for the consumers.
Under the agreement, Liberty's Ziggo, fibre-based broadband provider, will merge with Vodafone's mobile network. In order to even the odds, Vodafone will have to pay Liberty around £770m (€1bn).
ComputerWeekly estimates that combined value could be £2.71 billion (€3.5bn).
“Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole,” said Vodafone CEO Vittorio Colao.
“This transaction marks a continuation of Vodafone’s market-by-market convergence strategy, and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”
Liberty CEO Mike Fries added: “Throughout Europe, Liberty is capitalising on the rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity.
“Both Ziggo and Vodafone customers will be at the forefront of this new world. We look forward to working together to develop cutting-edge converged services for the Dutch market.”
The Wall Street Journal, reporting on the news, says this is yet another confirmation of a fragmented European telecommunications market that's trying to consolidate in order to stay relevant.
It mentions BT's acquisition of EE, France's Orange SA's efforts to acquire Bouygues SA, as well as Vivendi SA's 20 per cent stake acquisition at Telecom Italia SpA.
Competition regulators are not entirely happy with these movements, as they believe too much power concentrated in a few companies won't bring much good to consumers.