Vodafone has reportedly indefinitely postponed plans to make a bid for Kabel Deutschland (KDG).
While the UK-based mobile operator had intended to approach the German cableco after the publication of its financial results last week, leaks of the news…
Vodafone has reportedly indefinitely postponed plans to make a bid for Kabel Deutschland (KDG).
While the UK-based mobile operator had intended to approach the German cableco after the publication of its financial results last week, leaks of the news disrupted internal talks, causing the postponement, Bloomberg cited three unidentified sources as saying.
Vodafone and KDG have declined to comment.
Vodafone had considered a bid for KDG prior to the latter’s IPO in 2010 but dropped plans because of resistance from shareholders. German business publication Manager Magazin reported in early February that the UK telco’s renewed bid plans were at an advanced stage. The German publication said at the time that the CEO of the German unit, Jens Schulte-Bockum, and head of strategy, Warren Finegold, were in favour of a bid and that group CEO Vittorio Colao was also leaning toward approving an offer.
Bernstein analysts commented Vodafone’s decision not to make an offer was unsurprising, given KDG’s share price has risen about 10% since news of a possible approach from Vodafone first broke.
The analysts noted that this puts Vodafone in an “awkward position” given Colao has said the company would like to offer “unified services” and, as such, needs to invest in fixed-line.
If the telco decides not to go ahead with a bid, they added that KDG could join forces with another wireless operator such as Deutsche Telekom’s O2 or KPN Germany. In such a scenario, Vodafone could either have to make a costlier counterbid or risk being marginalised.
“The spectre of acquiring expensive cable businesses to fill in wireline infrastructure has now been raised, and while this is likely to result in a stronger business in the long term, Vodafone will not be able to acquire these assets on the cheap,” the analysts said.
KDG posted revenue growth of 8.8% to €465m for the third quarter of its fiscal year, ended 31 December 2012. EBITDA stood at €220m, up 10.2% year-on-year. The EBITDA margin was 47.4%.
