EU Clears Vodafone-Kabel Deutschland Merger

(RTTNews) - The European Commission on Friday approved British telecom giant Vodafone Group plc's (VOD.L) 7.7 billion euros acquisition of German cable operator Kabel Deutschland (KBDHF.PK).

The Commission said its probe confirmed that the merging parties' activities were complementary and will not hamper competition. The decision clears a major hurdle for Vodafone as the deal is hoped to help it expand beyond mobile in the ebullient German market.

Vodafone hopes to close the deal by October 14. The 7.7 billion euros ($10.42 billion) deal was announced in June.

The European Commission had probed the effects of the deal on competition in the markets for TV infrastructure and content services, the supply of mobile telephony services and access, among others.

The Commission felt the merged entity will not be able to leverage Kabel Deutschland's dominance in the wholesale market for TV signal transmission by cable into the IPTV market.

Further, Vodafone's demand for wholesale pay TV channels and its share in retailing TV services are limited, and it does not compete with Kabel to supply TV to blocks of apartments and houses.

The Commission also said that regional cable operators and former state-owned monopoly Deutsche Telekom will continue to provide competition to the merged entity.

While Kabel Deutschland mainly offers cable TV, fixed line telephony and Internet access services, Vodafone's core business consists of mobile telephony services. To some extent, it does offers fixed line telephony and Internet access, as well as IPTV.

The deal will allow Vodafone to access Kabel Deutschland's fixed-line network to diversify its offering in Germany beyond its mobile-phone business.

Recently, Vodafone said it secured a 76.5 percent stake in Kabel Deutschland for 7.7 billion euros - above the 75 percent it had set for the deal to fructify.

Earlier this month, Vodafone agreed to sell its 45 percent stake in Verizon Wireless to Verizon Communications Inc. for about $130 billion.

Vodafone shares are trading at $33.58, up $0.04 or 0.12%, on a volume of 7.4 million shares on the Nasdaq. In London, the stock closed at 208.50 pence, down 1.25 or 0.60%, on a volume of 132 million shares.

In Germany, Kabel Deutschland shares closed at 93.75 euros, up 0.14 euros or 0.15%, on a volume of 354 thousand shares.