Vodafone’s bid to acquire Kabel Deutschland has been agreed after the German cableco’s managment and board accepted a €7.7 billion offer.
It is now up to up to Kabel Deutschland shareholders to rubber stamp the deal.
In a statement, Kabel Deutschland CEO Dr Adrian v Hammerstein said the two companies are “an ideal fit”.
He added: “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.”
Vodafone confirmed earlier this month that it had made a preliminary offer, which led to Liberty Group, which recently purchased Virgin Media, to counter bid.
However, Vodafone is firmly in the driving seat as it looks to boost growth following the news that it recorded its first fall in annual revenues since 2005 and a 90 percent fall in profits.
CEO Vittorio Colao commented: “The transaction announced today… will lead to the creation of an operator with significant competitive scale, attractive operating and capital investment efficiencies and a combined management team with expertise across all communications segments and technologies.”
The operator said it sees “significant potential to accelerate the growth” by cross-selling to each company’s customer base and offering a premium unified communications services to consumers and businesses in Germany.
Kabel Deutschland is Germany’s leading triple play cable operator, providing television, telephony and broadband services to approximately 8.5 million households.
However, its subscriber base is “under penetrated” with broadband and pay-TV penetration of only 16 percent and 12 percent respectively.
Vodafone said it intends to migrate its existing fixed line DSL customer base to Kabel Deutschland’s cable network where possible, generating savings from closing down DSL central offices, reduced maintenance costs and removing the need to pay unbundled local loop and bitstream fees.
Meanwhile, its mobile business will benefit from Kabel Deutschland’s network, which will provide transmission capacity for Vodafone’s base stations at considerably lower cost than prevailing market rates for leased capacity.
Vodafone said Kabel Deutschland’s management would continue to be responsible for the combined consumer fixed line business throughout Germany.
Following completion of the transaction, Vodafone will have 32.4 million mobile, five million broadband and 7.6 million direct TV customers in Germany.