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Vodafone and Liberty Global have announced a merger of their operating businesses in the Netherlands to form a 50/50 joint venture which will function under the Vodafone and Ziggo brands.
The move will result in the creation of an integrated communications provider with over 15 million revenue generating units, of which 4.2 million are video, 3.2 million are high-speed broadband, 2.6 million are fixed-line telephony and 5.3 million are mobile.
The development is aimed at providing Dutch consumers with connectivity and entertainment inside and out of the home by leveraging Vodafone’s 4G mobile capabilities along with Ziggo’s Horizon TV product range, 200 Mbps nationwide broadband internet and Wi-Fi network.
On the basis of the enterprise value of each business, following the deduction of Ziggo’s net debt worth €7.3 billion (£5.6 billion), Vodafone will pay €1 billion in cash to Liberty Global towards the equalisation of ownership in the JV, showing a difference worth €2 billion in the equity value of both companies. The joint venture is slated to bring about substantial efficiencies, with run-rate cost and capex synergies of €280 million annually by the fifth full year post closing, similar to a net present value of approximately €2.5 billion after integration costs.
The transaction is expected to close around the end of 2016 and is subject to regulatory approvals and consultations with the Works Councils.
