Vodafone Wins Conditional EU Approval for Liberty Global Deal

Aoife White, Bloomberg News

Pedestrians walk in front of an advertisement outside a Vodafone store, operated by Vodafone Group Plc, in London, U.K. , Bloomberg

(Bloomberg) -- Vodafone Group Plc won conditional European Union approval for its 18.4 billion euro ($20.7 billion) takeover of Liberty Global Plc’s cable assets in eastern Europe and Germany.

The company’s offer to give smaller rival Telefonica SA access to its entire German cable network and assure German broadcasters worried about the company’s power removed EU concerns, the European Commission said in an emailed statement on Thursday. Telefonica will be able to "compete more effectively" for broadband internet in the country, the EU said.

The deal sees Vodafone scoop up almost a third of Liberty Global and helps it bundle internet, phone and TV services in Germany, its biggest market, in a challenge to former monopoly Deutsche Telekom AG. It will hand Liberty Global’s dealmaking management team almost 11 billion euros in cash, leading to speculation that it could buy a mobile operator or broadcaster in addition to promised share buybacks.

Regulators said last year they were concerned that merging Vodafone with Liberty’s Unitymedia cable internet business would reduce the number of providers and eliminate competition. Approval is a victory for Vodafone after Deutsche Telekom’s Chief Executive Officer Tim Hoettges vowed last year to try to block the deal which he said would create a monopoly for part of the TV market and possibly harm media plurality.

To appease broadcasters, Vodafone promised to avoid contracts that might prevent them using internet platforms to distribute their content. It also promised to freeze feed-in-fees it pays to free-to-air broadcasters to show their channels and will continue to carry their HbbTV signal, which allows TV customers access interactive services.

Regulators saw no concerns with Vodafone’s acquisition of Czech, Hungarian or Romanian assets. It didn’t take any issue with German retail TV or see any chance the deal would reduce investment in next-generation networks in the country.

--With assistance from Thomas Seal.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser, Peter Chapman