& cplSiteName &

DT CEO to Fight Vodafone-Liberty Deal

Iain Morris
5/9/2018
50%
50%

Deutsche Telekom CEO Timotheus Höttges has indicated he will fight Vodafone's efforts to acquire Liberty Global's Unitymedia business in Germany, arguing the takeover would lead to a "re-monopolization" of the cable market and leave 70% of the pay-TV market in Vodafone's hands.

Speaking to analysts during an earnings call this afternoon, Höttges also questioned Vodafone's assumption that European and not German authorities would oversee the deal, given the heavy impact it would have on the German market.

No to German Reunification
Deutsche Telekom CEO Timotheus Hottges says a Vodafone takeover of Unitymedia in Germany would be a 're-monopolization' of the cable industry.
Deutsche Telekom CEO Timotheus Höttges says a Vodafone takeover of Unitymedia in Germany would be a "re-monopolization" of the cable industry.

The comments came just hours after Vodafone Group plc (NYSE: VOD) had announced an €18.4 billion ($21.9 billion) takeover of Liberty Global Inc. (Nasdaq: LBTY)'s networks in Germany, the Czech Republic, Hungary and Romania. If approved, that deal would give rise to Europe's biggest operator of fixed and mobile networks and pose a serious challenge to Deutsche Telekom AG (NYSE: DT) in Germany. (See Vodafone Pounces on Liberty Cable Assets in €18.4B Deal.)

Deutsche Telekom's share price was trading down about 2% in Frankfurt this afternoon after news of the deal between Vodafone and Liberty and Deutsche Telekom's publication of financials showing a 3.9% fall in reported revenues for the first quarter.

Vodafone believes regulators will not oppose the deal in Germany because its existing cable network, which it acquired when it bought Kabel Deutschland for €7.7 billion ($9.2 billion, at today's exchange rate) in 2013, does not overlap with the footprint of Unitymedia.

But Höttges indicated that he would resist the deal in talks with German authorities. "I will do everything to protect the competitiveness for our customers and for the market environment in Germany," he told analysts.

"My observation is that there will be re-monopolization of the cable market and a situation where 70% of the TV market would be in one hand," said Höttges. "This is something we will discuss with authorities. I question that it is an issue for Brussels alone because 80% of that deal is related to Germany. It is not clear why German authorities should not have something to say because it heavily affects the German landscape."

Höttges also accused Vodafone of misleading German regulatory authorities in previous discussions after Vodafone earlier today said that it would be willing to offer wholesale services on its merged cable networks.

"I was surprised by the statement that Vodafone can consider wholesale access obligations for cable," said Höttges. "We had ten months of negotiations with Homann [the president of the Bundesnetzagentur, which regulates Germany's telecom market] and Vodafone's position was heavily opposed to this."

The Deutsche Telekom boss sounded especially concerned about the situation regarding German housing associations. Under current legislation, housing associations are forced to pay for cable installations to homes and seem unlikely to fork out separately for broadband lines provided by Deutsche Telekom. (See Vodafone-Liberty Merger Doubtful in Germany, Says Analyst and Vodafone's Colao, DT's Höttges Lock Horns in Barca.)

"The access to housing associations and housing wiring is something we see as a violation with regard to monopolization," said Höttges.

Another concern, although one that may hold little interest for regulators, is that a merger between Vodafone and Unitymedia would naturally lead to a reduction in wholesale business for Deutsche Telekom. Vodafone, which has traditionally rented facilities and capacity from the incumbent operator, believes it can save about €105 million ($125 million) in annual operating costs through reduced wholesale payments.

Next page: Sunnier outlook thanks to US business

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Featured Video
From The Founder
John Chambers is still as passionate about business and innovation as he ever was at Cisco, finds Steve Saunders.
Flash Poll
Upcoming Live Events
September 12, 2018, Los Angeles, CA
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 6, 2018, London, United Kingdom
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
T-Mobile to Play the Customer Care Card With Layer3 TV
Jeff Baumgartner, Senior Editor, Light Reading, 8/15/2018
Australia Could Open 5G Door to Huawei
Robert Clark, 8/16/2018
Video Navigation Gets an AI Assist
Jeff Baumgartner, Senior Editor, Light Reading, 8/16/2018
Eurobites: Deutsche Telekom Pulls Out of Iran
Iain Morris, International Editor, 8/17/2018
Animals with Phones
When Your Cat Hijacks Your Tech Click Here
Latest Comment
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed