German cable operations need to bulk up if they're to successfully compete with incumbent telephone companies, according to Liberty Global Chief Executive Mike Fries, who called the German telecom market a "David and Goliath type battle." Liberty Global, of course, is part of John Malone's empire and he's a man who knows a lot about David and Goliath battles.
Fries' lament has been imported from the U.S., where cable operators for years have maintained it's tough to compete on level ground with deep-pocketed telcos like Verizon and AT&T. In Germany, "scale is critical for our business," Fries said. "We don't have it today, certainly not compared to the incumbent."
The remarks are at least partially intended to soften up the regulatory environment as Liberty, which bills itself as the world's second largest cable operator, tries to expand through acquisition. The company already bought Germany's second largest cable operator, Unitymedia GMbH and is eyeing the third biggest, Kabel-Baden Wuerttenberg GmBH. Recently Versatel, with 185,000 subscribers, sold its cable business to financial investor Chequers Capital so it's possible that's in play as well.
Liberty is not alone in chasing after more properties. The country's biggest cable operator, Kabel Deutschland Holding AG has been identified as a potential buyer for a pair of smaller operators, and its CEO Adrian von Hammerstein has been quoted as saying that it "would be extremely helpful if we had a consolidated footprint."
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