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Telecommunications shake-up

September 20, 2013

European competition regulators have approved Vodafone's plans to take over Kabel Deutschland. The British telecommunications giant can thus take a multiplatform fight to longstanding market leader Deutsche Telekom.

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The logos of Vodafone and Kabel Deutschland side-by-side. (Photo: Armin Weigel/dpa)
Image: picture-alliance/dpa

On Friday, European Commission regulators approved Vodafone's planned takeover of German cable television provider Kabel Deutschland. The antitrust panel said that an "investigation confirmed that the activities of the merging parties were mainly complementary" and would not "appreciably alter competition."

Kabel Deutschland subsequently announced that the deal could provisionally go ahead on October 14.

Vodafone, flush with cash after selling its 45 percent stake in the US cellular giant Verizon Wireless, valued the company at 7.7 billion euros ($10.4 billion). Kabel Deutschland has around 8.5 million cable subscribers. Vodafone effectively paid 87 euros, if you include a 2.5-euro dividend, per share.

Vodafone officials champion the takeover as their chance to compete with market leader Deutsche Telekom on all fronts.

The chairman of Vodafone's German operations, Jens Schulte-Bockum, said his company would soon be able to offer "landline and cell phone service, broadband Internet and television all in one package," allowing it to match the portfolio offered by Deutsche Telekom.

As well as acquiring a foothold in German television, Vodafone is perceived to make separate strategic gains with the purchase. The cables installed in existing Kabel Deutschland subscriber households are mostly suited for the provision of broadband Internet as well. Vodafone already offers home phone lines and high-speed Internet, but in most cases it has to pay Deutsche Telekom rent for the connection at people's homes.

The cable company operates in 13 of Germany's 16 states. Vodafone has already secured more than 75 percent of shares in Kabel Deutschland, and the company gave shareholders who resisted the sale a window until September 30 to change their minds.

The European Commission serves as the EU's highest antitrust regulator; it has the power to veto takeovers if it deems that they will damage competition or consumer choice.

msh/hc (AFP, dpa)