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Vodafone agrees to acquire Kabel Deutschland for €7.7bn

The acquisition will make Vodafone the largest pay-TV provider in Germany and the second largest fixed broadband provider.

By CBR Staff Writer

UK mobile operator Vodafone has agreed to acquire Kabel Deutschland for €7.7bn, marking the second-biggest acquisition of a telecommunications network in Europe in 2013.

The move caps the long running chase of the German cable group that will now promote the UK group’s European goals in bundled fixed line, mobile and TV services.

Vodafone CEO Adrian Hammerstein said that Kabel Deutschland has evolved into one of the most dynamic players in the sector.

"Its high-performance infrastructure and successful strategy makes it ideally placed to continue returning above-average growth in a rapidly changing market," Hammerstein said.

"Together, we have the opportunity to become Germany’s leading telecommunications and television provider and to create what for the German market is a unique, winning combination of fixed line and mobile communications."

The acquisition will also provide Vodafone with access to the German firm’s five million broadband and 7.6 million direct TV subscribers in Germany.

Kabel Deutschland Supervisory Board chairman, Tony Ball, said that during the past decade, Kabel Deutschland has led the converged pay-TV, telecommunications and Internet services in Germany.

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"The company is now poised for further growth as a hub for next-generation broadband and content distribution, extending Vodafone’s proven capabilities in mobile networks," Ball said.

According to the Ovum’s Industry, Communications & Broadband practice principal analyst, Emeka Obiodu, the move would make Vodafone the largest pay-TV provider in the country and the second largest fixed broadband provider.

The acquisition adds in three key insights with the first one being that a successful deal will be the UK firm’s single biggest mergers and acquisitions (M&A) deal since its 2007 deal to enter into India, according to Obiodu.

Obiodu continued: "The second insight is that the precarious situation of Europe’s telcos follows mostly from their exposure to mobile telecoms where the market is now saturated and prices have been on a steady downward trend."

"The third insight is how this deal demonstrates the pragmatism of Vodafone. Whereas Vodafone was regarded as a mobile telecoms company in the past, its quest for survival in Europe means it is prepared to jettison its ideological purity."

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