UK mobile phone firm makes its first move into consumer broadband and television in one of the biggest telecoms deals in recent years
Vodafone has agreed to buy Germany's biggest cable company for €7.7bn (£6.6bn) in a deal that sees the UK mobile phone firm make its first move into consumer broadband and television.
The deal has been approved by the board of Kabel Deutschland but could become the subject of a bidding war with US firm Liberty Global, which owns Germany's second biggest cable firm UnityMedia.
Vodafone has offered €87 a share, valuing the business at €7.7bn, an increase on an informal offer of €82 a share made two weeks earlier. It will also take on the company's debt of £2bn.
Chief executive Vittorio Colao said: "German consumer and business demand for fast broadband and data services continues to grow substantially as customers increasingly access TV, fixed and mobile broadband services from multiple devices."
He added that the deal is "consistent with Vodafone's broader strategy of providing unified communications services."
The company has been keen to move into the cable market and wants to tap into "quad play", offering TV, broadband, telephone and mobile.
Colao said the price was "full and fair" believing the company could make cost savings of €300m a year, eventually saving €3bn. The Kabel Deutschland management team would remain in place to run the fixed line business.
The company has 8.5 million customers and its cables pass 15.3m German homes.
If the deal goes through, it would be one of the biggest in the telecoms industry in several years and comes 13 years after Vodafone's first foray into Germany, when it bought mobile phone network Mannesmann for £101bn.
The company will be hoping for better luck with this bid after a move to merge with a Greek rival fell through, and an expansion into Burma ended due to high start-up costs.
It comes a month after Vodafone signed a rental agreement with Deutsche Telekom for its cable capacity, and a year after Vodafone's first fixed-line takeover of business and wholesale provider Cable & Wireless Worldwide last year for £1bn.
However, Colao said the Deutsche Telekom deal, which passes many of the same homes as the Kabel Deutschland cables, would remain in place.
He said: "It won't affect the wholesale agreement. Deutsche Telekom will remain an important deal with us and we will remain important partners with Deutsche Telekom."
Industry analysts have suggested this deal could be followed by bigger acquisitions as the telecoms giant looks to secure its own future and risk any possible takeover.
However, Vodafone played down any future takeovers. Colao said: "I wouldn't have any read across this deal and clearly every situation is different. The intention is to reach homes and offices and I would not comment on any other market.
Its US partner, Verizon, has said it wants to buy Vodafone's 45% stake in Verizon Wireless – worth around $130bn– which could leave Vodafone vulnerable to a takeover. A $100bn offer was rejected by Vodafone two months ago.
Kabel Deutschland chief executive, Adrian von 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 company's revenues hit €1.83bn in the year to end of March, with pretax profits of €226m.
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