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Mobile was a key factor in Liberty-Virgin merger

Liberty Global to pay $23.3bn for UK-based quad play operator Virgin Media, creating broadband powerhouse


Published: 6 February, 2013

READ MORE: M&A | UK | Virgin Media | Broadband | MVNO

Mobile activities were one of the attractions which led Liberty Global to offer $23.3bn for UK-based cable and quad play group, Virgin Media. The cash-and-stock deal will create a global powerhouse - the leading broadband provider in the world, Liberty says, though some analysts think there are still larger Chinese players. Regardless, the combined entity will serve 25m customers in 14 countries and will look for accelerated growth in mobile and quad play services, as well as business-to-business revenues, which carry higher margin and lower churn than consumer markets.

US-based Liberty Global is paying a 24% premium on Virgin Media's share price to secure its prey, with the firm's billionaire chairman John Malone finally getting an acquisition he originally chased several years ago. The deal will intensify the battle royal between Liberty and Rupert Murdoch's News Corp/Sky, and in the UK may push the latter into a mobile/quad play move, something it has so far resisted. Both Virgin and Sky decided to stay out of bidding in the country's current 4G spectrum auctions but have extensive Wi-Fi activities, while the former also offers mobile services via the Virgin Mobile MVNO.

Mike Fries, president and CEO of Liberty, said in a statement: "Adding Virgin Media to our large and growing European operations is a natural extension of the value creation strategy we've been successfully using for over seven years. After the deal, roughly 80% of Liberty Global's revenue will come from just five attractive and strong countries - the UK, Germany, Belgium, Switzerland and the Netherlands. Virgin Media's market leading innovation and product expertise, particularly in mobile and B2B, will accelerate our own development of these business segments." He is also looking for cost savings of $180m a year from synergies.

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