VODACOM’S majority shareholder – Vodafone, has begun talks, which could lead to the subsquent take-over of a German cable TV operator, Kabel Deutschland (KDG), in a deal estimated at €2.8 billion.
British mobile phone produce Vodafone, which owns a 65 percent stake of South Africa’s leading cellular network, wants to take over the company a private equity group, Providence.
KDG, which last week announced a 15.4 percent increase in second quarter revenues, has around 11 million customers in Germany and would be a good fit with Vodafone’s local landline subsidiary, Arcor which controls about 14 per cent of the broadband market.
KDG’s revenue increase took it to to €339.3 million, while EBITDA increased 30% to €142.9 million, in what is attributable to the networks acquired earlier this year from the Orion Cable Group.
The firm recently confirmed that it was taking another look at trying to acquire some smaller regional operators.
In 2004 KDG tried to buy two cable operators serving regional areas, which would have given the company nationwide coverage, but the deal was blocked by the cartel office amid fears of the company gaining a dominant market position. Changes in the market place with the emergence of telcos providing TV services should make cartel fears easier to overcome.
“A nationwide cable operator would enhance competition vis-à-vis the large telephone incumbents which would also be in the best consumer interest. We want to play a leading role in any such market consolidation,” KDG’s CEO, Adrian v. Hammerstein said when the company announced its financial results last week.
Kabel Deutschland was founded in January 1999 by Deutsche Telekom, after it was ordered to spin off its entire cable TV business as required by regulatory terms.
For historic reasons, Kabel Deutschland cannot offer its products directly to all are connected via Kabel Deutschland’s network, since only one third of all viewers are direct customers.
In the early 1980s, when the cable network was originally established, Kabel Deutschland’s predecessor Deutsche Bundespost had to leave in-house cables to other companies or the house owners.
This turned out to be a significant obstacle since Kabel Deutschland now has to make single contracts with hundreds of small cable operators.
