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Vodafone coughs up £6.5bn for Kabel Deutschland

Hopes new bundles will bust up rivals

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Vodafone has snapped up Germany’s largest cable operator, creating a brand capable of offering Germans bundles of broadband, TV, and both fixed-line and mobile telephony - and preventing competitor Liberty Global from doing the same.

Liberty, flush from acquiring Virgin Media, had been seen sniffing around Kabel Deutschland earlier this month. Vodafone has said it was in talks to buy the company and its offer has been recommended by the Kabel board.

Soon we should see Vodafone expanding rapidly into Germany as a quad-service provider.

Kabel Deutschland has network infrastructure passing 15.3 million German homes, but only 7.6 million TV subscribers and five million broadband customers, which Vodafone reckons is underexploited potential.

Adding mobile services to Kabel’s portfolio will allow service-bundling - warding off competitors - and allow cross-selling for Vodafone Germany's existing 32.4 million mobile customers.

A few years ago it was assumed everyone would have to be a "quad player" as the economies of bundled services would force out companies lacking a full portfolio. The assumption was that the public would want combined billing from one communications supplier, and would thus migrate to companies offering that convenience.

In some markets, such as the UK, that has simply not happened. In Germany, Vodafone was already worried enough about this situation to be offering ADSL services through unbundled exchanges, so much so that it recently it signed a deal with Deutsche Telekom to sell VDSL services. Both the ADSL and VDSL services will remain on the market for now, but only for areas beyond the reach of Kabel Deutschland's infrastructure.

The deal will have to go through the usual regulatory processes, but is unlikely to hit any significant bumps given the competitive German market. El Reg expects it will complete later this year. ®

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