Vodafone, Liberty looking at options, including merger: report

British telecom giant Vodafone Group Plc and cable telecoms giant Liberty Global Plc are looking at a range of options, including a merger, Bloomberg yesterday reported, citing people familiar with the matter.

Both companies are looking at an asset swap, including a merger of their European businesses, the report said.

The talks are at a very early stage, but Liberty has "soured slightly" on the talks in recent weeks on management roles, including who will lead the combined company and the role of Liberty chairman John Malone, the report added.

Last November, Bloomberg had reported that Vodafone is exploring the acquisition of Liberty Global Plc, a deal that would create Europe's largest phone, internet and TV company (See: Vodafone mulls acquiring Liberty Global)

Liberty Global, backed by US billionaire Malone, operates very high-speed broadband cable networks in nearly a dozen European countries.

The Colorado-based company was formed through the 2005 merger of Liberty Media and UnitedGlobalCom.

It operates in 10 countries in Europe, and is the largest cable operator in Poland, Switzerland, Belgium, Austria, Slovakia, Hungary and the Czech Republic.

Liberty Global, which has spent around $40 billion in the past seven years in acquiring European assets, has a market cap of $39.4 billion and debt of $41.1 billion.

Early last year it paid $15.75 billion to acquire Virgin Media Inc, the UK's second largest pay-TV operator that also provides fixed and mobile telephone, and broadband internet services.

As part of its acquisition, Liberty Global relocated to the UK by becoming a subsidiary of a new British holding company.

Vodafone is one of the world's leading mobile communications providers, operating in more than 30 countries and in partnership with networks in over 50 more.

The Newbury, Berkshire-based company has recently cleared most of its debt after it sold its stake this year in US-based Verizon Wireless for $130 billion. It had £5.9 billion in cash at the end of September 2014.

Vodafone, which already has a fibre network through the acquisitions of Cable & Wireless Worldwide, Kabel Deutschland and Spain's Corporativo, has nearly 419 million customers across 30 countries and around 19 million in the UK.

The merger between Vodafone and Liberty Global would create a communications company with annual sales of more than $80 billion.

But the potential deal is likely to face regulatory issues in the UK, Germany, and the Netherlands, since their operations overlap each other.