A long-discussed deal between Vodafone (LON:VOD) and US cable company Liberty Global – the owner of Virgin Media - is finally on the cards.
Merger speculation surrounding the pair has been rife lately and the pair confirmed this morning they are in early stage asset swap talks.
That’s not the same as a merger though, which would have created a £100bn global telecoms powerhouse, although some analysts still think a tie-up could happen.
“Even though it’s not a discussion concerning the marriage of the two, one has to wonder whether this is somewhat of a warm-up act for a heightened display of affection between the pair,” said Augustin Eden at Accendo Markets.
Ever since the BT agreed takeover of EE earlier this year, there’s been a buzz of consolidation talk in the phone and broadcast sector as network providers search for content amid the hope for quad play - land line, mobile, broadband and TV - to grab market share.
Vodafone has over 450 million mobile customers across the globe and has already moved into fixed line networks and cable operators in Spain and Germany.
Liberty has cable and wireless operations in 12 European countries. Virgin Media in the UK was acquired by the firm in 2013 for US$23bn.
Last month, Liberty’s chief executive John Malone mentioned the possibility of a deal with Vodafone, saying it could create significant value for shareholders.
"We've looked at that from our side and there would be very substantial synergies if we could find a way to work together or combine the companies with respect to western Europe," he said.
"Is there a great fit in Germany? Absolutely. Is there a great fit in the UK? Absolutely.”
This morning’s talks of an asset swap sent Vodafone shares - up recently on the bid speculation - down 5p to 242p.