Report: Vodafone re-enters talks with Liberty Global over UK tie-up

Vodafone has re-entered talks with Liberty Global about a possible tie-up in the UK, according to reports.

The Register cites multiple unnamed sources, claiming that Vodafone execs have been locked in discussions with Liberty Global SVP and chief development officer  Andrea Salvato over a potential deal.

Liberty, which owns Virgin Media in the UK, has previously held discussions with Vodafone group about possible merger options. Though these negotiations, which took place in 2015, initially led to nothing, the two companies later partnered on a joint venture in the Netherlands which is being led by former Vodafone UK CEO Jeroen Hoencamp.

The Financial Times reported last month that Vodafone group CEO Vittorio Colao was still interested in a potential deal. Colao reportedly told a private meeting at Mobile World Congress that a tie-up with Liberty “is still an attractive combination” according to FT sources. However, he claimed no deal was currently on the table.

Vodafone is currently the UK’s third largest mobile operator with around 18 million customers. Virgin, which runs an MVNO an MVNO on EE, has around three million mobile customers and 5.7 million cable customers.

A corporate tie-up would potentially give Vodafone a stronger footprint to tackle the emerging bundled services market, which sees providers offer mobile, fixed line, broadband and TV services as one package.

BT, following its £12.5 billion acquisition of EE, already offers all four services, while rival Sky, which has also been linked with Vodafone in the past, recently launched an MVNO to complete its bundled offer.

However, it could face regulatory hurdles, as it would remove one of the UK's biggest MVNO's from the market, should the two companies merge. Last year, European regulators rejected CK Hutchison's bid to buy Telefonica's O2 UK arm and merge it with its own Three UK. The European Commission put a stop to the deal, citing competition concerns.

Despite the reports in the Register, the FT said sources had told the national that nothing has changed since Colao’s words at MWC.

Vodafone is currently locked in merger talks in India, where it is looking to join up with third placed operator Idea Cellular to tackle the challenges caused by the launch of Reliance Jio last year.

In its last financial results, Vodafone said lower revenues were caused by challenges in India and the UK, so it would make sense for the company to look at business solutions in both of those markets.