Vodafone will pay Liberty Global €1 billion to push through a joint venture between the two operators’ businesses in the Netherlands.
The new company, which will operate under both the Vodafone and Ziggo brands, will have 9.2 million fixed and mobile customers.
Vodafone is making the €1 billion cash payment to offset a €2 billion difference in the two companies’ equity value.
The transaction is expected to close towards the end of this year, subject to regulatory approval.
Vodafone CEO Vittorio Colao said he expected a “relatively straightforward regulatory process”.
The two companies are forecasting cost, capex and revenue synergies of approximately €3.5 billion after integration costs.
Additional debt financing is expected to be raised in the future to reach its target leverage, they added.
Ziggo has 4.1 million customers who are signed up to buy a range of TV, video, broadband, and fixed-line telephony (in the form of VoIP) services.
The combination of its Horizon TV offering and 200 Mbps nationwide broadband network with Vodafone’s LTE will provide retail and business customers with a converged offering to take on market leader KPN.
The Supervisory Board of the JV will be comprised of three representatives from each company plus two members nominated by the Works Council.
Each shareholder has the right to initiate an IPO after three years and initiate a sale of the entire JV after four years.
Colao said: “The combination of Vodafone’s leading mobile business with Ziggo’s successful broadband and TV business creates a strong and competitive integrated communications player, which will invest in digital infrastructure, entertainment services and productivity applications for Dutch consumer, business and public sector customers.
“Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole.
“This transaction marks a continuation of Vodafone’s market-by-market convergence strategy and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”
Liberty Global CEO Mike Fries added: “Throughout Europe, Liberty is capitalizing on the rising demand for lightning-fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity.
“Soon, both Ziggo and Vodafone customers in the Netherlands will be at the forefront of this new world, and we couldn't be more excited about our partnership with Vodafone.”