The merger talks between Vodafone Group and Liberty Global can create both hurdles and growth opportunities for the two.
The talks, at an earlier stage, are aimed at looking at several options including merging the two or combining their businesses in Europe or a series of asset swap, Bloomberg reported.
Naming the CEO to run the combined company will be a big task. The role of Liberty Global Chairman John Malone can also be a serious issue.
London-based Liberty Global has an enterprise value at nearly $89 billion, while Newbury, England-based Vodafone is valued at nearly $141 billion.
Liberty Global is the largest cable company in the world. Vodafone is one of the largest telecom operators in the world.
The initial level talks between Vodafone Group and Liberty Global are happening at a time when consolidation in the telecom industry in Europe is at its peak.
The mobile industry has seen several consolidation efforts. UK-based BT Group agreed to acquire EE, the U.K. mobile business co-owned by Deutsche Telekom and Orange, for $19 billion. Telefonica has sold 02, its wireless carrier in the U.K., to Hong Kong-based Hutchison Whampoa for $15.3 billion. In India, America Movil, Mexico-based telecom operator, is considering the acquisition of telecom assets.
“While buying Liberty outright was Vodafone Chief Executive Officer Vittorio Colao’s original idea, more recently his goal has shifted into acquiring that company’s western European assets, a report in Bloomberg said.
Last month, Malone said a tie-up with Vodafone would be a great fit for his cable empire in western Europe. He cited the benefits of a merger in markets such as Germany, the U.K. and the Netherlands, talking to Bloomberg News.
Malone-owned Liberty Broadband owns more than 25 percent of Charter Communications, which just agreed to acquire Time Warner Cable for $55 billion. In 2014, Liberty Global acquired Dutch cable provider Ziggo. In 2013, Liberty Global purchased U.K.-cable operator Virgin Media for $16 billion.