LONDON -- Vodafone is eyeing up a potential acquisition of Kabel Deutschland, according to reports stemming from a person "familiar with Vodafone's strategy" quoted in Germany's Manager magazine.
The move, which could cost as much as 5.4 billion pounds, would boost Vodafone's profile in Europe, which has suffered in recent years due to the turbulent economy, with Northern and Central Europe's revenues down 0.9% on an organic basis, and Southern Europe seeing group service revenue decline 17%.
The news echoes that of its 1.3 billion pound Cable & Wireless Worldwide takeover, as it would also strengthen its fixed-line operations that are needed to connect its radio masts as well as handle the volumes of Internet data.
This is apparently not the first time that Vodafone has considered an approach for Kabel Deutschland; the deal was allegedly looked at in 2011 when Providence was selling its 22% stake, but no move transpired.
An acquisition of Kabel Deutschland would also offer Vodafone an entry points into Germany's pay-TV and Internet market, however: another source of potential growth for the multinational telecommunications group. Currently, Vodafone has to rent capacity from its rivals' fixed networks in continental Europe.
The news follows a turbulent few weeks for the company, as many analysts downgraded it from "buy" to "neutral," citing elevated M&A risk. Interestingly, Citigroup stated at the beginning of last week: "Assets are scarce with cable and, in places, unbundled local loop operators, still short of national reach."
Although unconfirmed by any official or spokesperson for either company, Vodafone's shares dipped 1.5% on the news to 171 pence having previously closed at 173.50 pence, while shares in Kabel Deutschland jumped over 3% on the speculation.
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The article Vodafone Group to Bid for Kabel Deutschland? originally appeared on Fool.com.
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