Vodafone kicks tires on Liberty Global buy, sees stock drop 5%

British telecommunications conglomerate Vodafone is considering the purchase of European pay-TV company Liberty Global as it looks to counter consolidation in the U.K. telecom market.

According to reports by Reuters and Bloomberg, which both cite unnamed sources, internal discussions within Vodafone about this possible purchase have quickened of late, amid word that competitor BT Group is in talks to buy either Telefonica SA's O2 unit or EE, the wireless carrier jointly owned by Orange SA and Deutsche Telekom AG.

Reuters says the deal would create a conglomerate with $80 billion in annual sales. Vodafone is also considering other acquisition targets, such as TalkTalk.

The news agencies say that no formal talks between Vodafone and Liberty Global have occurred. Most of the tire-kicking, they report, is focused on the potential regulatory hurdles such a merger would have to overcome.

Investor reaction to the increased debt levels is also a concern. In fact, Vodafone's stock plummeted 5 percent Monday on word of the possible Liberty Global deal.

For more:
- read this Reuters story
- read this Bloomberg story
- read this story from The Guardian

Related links:
Reports: Vodafone mulls Liberty Global move as it considers UK options
'Hell, yes!' Malone will go after TWC if Comcast can't close the deal
Liberty Global effectively splits company with introduction of Latin America tracking stock

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