Vodafone Group Plc (ADR) (VOD): Quad-Play Is the Next Big Thing

Liberty Media Corp (NASDAQ:LMCA) will face a greater challenge in its Kabel ambitions. This is because the company already owns Unitymedia, the second largest cable company in Germany. It will face resistance from German authorities because the transaction might trespass on anti-competition/anti-trust laws.

On Wednesday, Vodafone Group Plc (ADR) (NASDAQ:VOD) announced that it will match the 85 euro per share bid of Liberty Media Corp (NASDAQ:LMCA) and is ready to pay as much as $10 billion in cash. On the other hand Liberty is not willing to pay cash and will trade assets for the coveted Kabel.

Kabel’s price has been consistently rallying on acquisition rumors, and I believe it will continue to rise. According to reports, Kable will not accept the 81 Euro per share bid and would take nothing less than 90 per Euro. Vodafone is in a better position to buy Kabel and will be the victorious party in this bidding war.

Bottom-line

The telecom industry has become alive with the struggle to supplement organic growth with acquisitive growth. All across the globe, leading industry players are engaged in bidding wars to control telecom infrastructure. This has greatly improved the valuations of industry wide valuations.

The acquisition of Kabel will be highly beneficial to Vodafone Group Plc (ADR) (NASDAQ:VOD) and will allow it to offer quad-play in Germany. Vodafone already offers quad services in Portugal and is well aware of the success of this model. Other leading players like Telefonica and France Telecom offer quad-play in Spain and France. The valuations of Vodafone will be positively affected if it closes the Kabel deal.

The shareholders of Kabel will not agree to anything below 90 euros, and there are indications that Vodafone will agree to pay this amount. Vodafone and Kabel are both sound investments and can show significant appreciation in the coming week on acquisition news.

The article Quad-Play Is the Next Big Thing originally appeared on Fool.com and is written by Mohsin Saeed.

Mohsin Saeed has no position in any stocks mentioned. The Motley Fool recommends Vodafone. Mohsin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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