Deep pocketed Vodafone could be eyeing Liberty Global

Vodafone, with $130 billion worth of Verizon's (NYSE: VZ) money burning a hole in its pocket, could make a move on Liberty Global (Nasdaq: LBTYA) and its wireline video service business, according to a telecommunications analyst. Such a move could also serve as a way to thwart any takeover by AT&T (NYSE: T) which, other reports said, is interested in Vodafone's European wireless business but would be turned off if the telecom giant gained more wireline presence.

"Vodafone is clearly interested in cable assets, as seen by its recent bid for German operator Kabel Deutschland," wrote Macquarie Equities analyst Amy Yong, in a note covered by the Middle East North Africa Financial Network ( Yong further pointed out that the "need for scale and scarcity of European cable assets" created "significant synergies in a Vodafone-Liberty Global combination."

From the Liberty perspective, such a combination might help accelerate a long-term goal to make wireless part of the combo platter of services being offered to its European subscribers.

Liberty Global CTO Balan Nair conceded the company's focus on wireless during an interview with FierceIPTV in May.

"Wireless is an important part of our story and it's ... a positive part of our revenue story," Nair said at the time, calling wireless a "lower margin product, for sure, but … a necessary part of what our customers want."

Collaboration with Vodafone could bring that piece either as a new Vodafone company or as part of a merged Liberty Global-Vodafone play. Either way, acquiring more wireline assets could stave off unwanted attention from AT&T, Enders Analysis telecommunications analyst James Barford told Bloomberg.

"Were somebody to buy Vodafone, AT&T would be the primary candidate," Barford said, and the carrier "would both be likely to summon the financial resources and has already expressed an interest in Europe."

AT&T, on the home front, is somewhat financially beholden to its multibillion-dollar broadband upgrade Project VIP, which is expanding its wireless and wireline capabilities throughout the United States.

In a sign of the times, Bloomberg quoted an unnamed source as emphasizing that AT&T "is only interested in wireless and would be deterred if Vodafone expands in cable and fixed-line businesses."

For more:
- carried this story
- and Bloomberg carried this story

Related articles:
Verizon to buy Vodafone's 45% stake in Verizon Wireless for $130B
Report: After Verizon deal, AT&T could target rest of Vodafone
Liberty Global's video business driven by speed, simplicity
Liberty Global plans 'set-top box on steroids' for European market