Vodafone Group PLC (LON:VOD) is set to become Europe's leading next generation network owner after agreeing to acquire operations in four countries from US cable giant Liberty Global for an enterprise value of €18.4bn.
Vodafone - the world's second biggest mobile operator - said in February that it was in talks about buying Liberty Global's assets in continental Europe where they overlap - Germany, Czech Republic, Hungary and Romania.
READ: Vodafone unlikely to overpay for Liberty Global assets or cut dividend, says Numis
The move will see the FTSE 100-listed group become the leading next generation network owner in Europe, with 54mln cable/fibre homes 'on-net' and a total reach of 110mln homes and businesses, including wholesale arrangements.
The group said it estimates cost and capex synergies from the deal of approximately €535mln per year before integration costs by the fifth year post completion, with an estimated net present value of over €6bn after integration costs.
It added that it sees revenue synergies with a net present value exceeding €1.5bn from cross-selling to the combined customer base.
Vodafone’ s chief executive Vittorio Colao commented: "This transaction will create the first truly converged pan-European champion of competition. It represents a step change in Europe's transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders.”
In afternoon trading, Vodafone shares were 1.1% higher at 209.9p.
David Madden, market analyst at CMC Markets UK, commented: “The motivation behind the move is to challenge Deutsche Telekom’s dominance in Germany. It would allow Vodafone to offer more competitive packages to customers, and it is estimated that the transaction would lead to savings of €1.5 billion through synergies.”
-- Adds share price, analyst comment --