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Liberty Global, Vodafone to merge their Dutch operations

Mumbai: Liberty Global and Vodafone will merge their Dutch operations. The 50:50 JV will create a national unified communications provider in the Netherlands with complementary strengths across video, broadband, mobile and B2B services.

Combining Ziggo’s fiber-rich broadband network with Vodafone’s mobile operations will create a stronger fixed and mobile competitor in the Dutch market, delivering significant benefits for consumers, businesses and the public sector through investment in digital infrastructure and customer experience.

The total cost, capex and revenue synergies has an estimated net present value of approximately €3.5 billion after integration costs.

Total synergies include cost and capex synergies with run‐rate savings of €280 million on an annual basis by the fifth full year post closing, equivalent to a net present value of approximately €2.5 billion after integration costs.

Based upon the enterprise value of each business, and after deducting Ziggo’s €7.3 billion of net debt, Vodafone will make a cash payment to Liberty Global of €1 billion to equalise ownership in the joint venture. Vodafone Netherlands will be contributed on a debt and cash free basis.

The transaction is expected to close around the end of 2016 and is subject to regulatory approvals and consultations with the Works Councils.

Vodafone Group CEO Vittorio Colao said, “The combination of Vodafone’s leading mobile business with Ziggo’s successful broadband and TV business creates a strong and competitive integrated communications player, which will invest in digital infrastructure, entertainment services and productivity applications for Dutch consumer, business and public sector customers. Together the €280 million of cost and capex savings are stated before integration costs and comprises more than €240 million of operating cost savings to be realized upon the completion of the integration activities.

“Ziggo’s €7.3 billion of net debt is based upon third‐party net debt and transaction related debt‐like adjustments as of September 30 2015 and is subject to customary closing adjustments. Covenant EBITDA is calculated in accordance with Ziggo’s third party debt agreements. We will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole. This transaction marks a continuation of Vodafone’s market‐by‐market convergence strategy and we look forward to partnering with Liberty Global to create a fully integrated provider in one of our core European markets.”

Liberty Global ceo Mike Fries said, “This powerful combination of the best fixed and mobile networks in the Netherlands will deliver huge benefits to Dutch consumers and businesses. Throughout Europe, Liberty is capitalizsng on the rising demand for lightning‐fast broadband speeds, the coolest digital TV platforms and apps, and seamless 4G wireless connectivity. Soon, both Ziggo and Vodafone customers in the Netherlands will be at the forefront of this new world, and we couldn’t be more excited about our partnership with Vodafone. We look forward to working together to develop cutting‐edge converged services for the Dutch market.”