Vodafone hires Goldman Sachs to advise on Kabel Deutschland deal

20 February 2013

Vodafone has reportedly taken the next step in a potential €10 billion bid for Germany’s largest cable operator, Kabel Deutschland, by hiring Goldman Sachs as an advisor.

An acquisition of the cableco would transform the German telecoms market, where Vodafone already holds significant wireless market share but lags behind Deutsche Telekom in the fixed broadband sector.

A person with direct knowledge of the matter told Reuters that Goldman had been hired by the British telecoms group, while a second person said Kabel Deutschland had retained Morgan Stanley and advisory firm Perella Weingberg to defend its interests should there be a Vodafone approach.

Vodafone could save €300 million a year through less reliance on Deutsche Telekom’s fixed lines into homes and may also be able to offload mobile traffic onto the Kabel Deutchland network, according to the newswire.

The acquisition would be the largest for Vodafone since its entrance into India in 2007 and would mark a change in strategy for the previously mobile-focussed group.

Market watchers have speculated that Vodafone would need to make a foray into the fixed market in order to compete with the increasing number of low cost operators and quad-play cable companies entering the mobile space.

One potential hurdle to a deal would be European competition regulators, who have blocked mergers of cable companies due to concerns of price rises for consumers.

Topics: Vodafone, Goldman Sachs, Kabel Deutschland, Germany