BARCELONA (Reuters) - Vodafone's VOD.L CEO Vittorio Colao said Deutsche Telekom's DTEGn.DE opposition to its plan to buy some assets from Liberty Global LBTYO.A was surprising, and he contested its assertion that Vodafone wanted to shut down competition.
Vodafone said this month it was in early-stage talks about buying Liberty Global’s cable assets in some continental markets where they both operate, the main one being Germany.
Colao said Britain, where Liberty’s Virgin Media is the leading cable operator, was excluded from the talks because Vodafone was not as advanced in combining fixed-line and mobile services in the country as in continental European markets. But he hinted that could change in the future.
Deutsche Telekom CEO Tim Hoettges on Monday stood by comments he made last week calling any deal “totally unacceptable” because it would create a cable TV monopoly in Germany.
“My perspective is: this deal is very unlikely to get approval. I find it from a competitive perspective unacceptable,” Hoettges said in answer to a reporter’s question at a Telekom presentation.
Colao said he had to be careful about what he said in response to Hoettges’ orginal comments to avoid getting personal.
“I was surprised by the comment from Tim,” he told reporters in Barcelona earlier on Monday. “I believe that competition is good.”
Colao said the logic behind DT’s opposition was interesting, given that it was the largest telco in Europe by market capitalisation, and had the most connections into homes the Germany, which he said was Europe’s best market.
“Why does us buying a regional cable company irritate him? I know why it irritates him, but it’s not for the right reasons,” he said.
Hoettges, in his latest broadside, said that when Deutsche Telekom disposed of its cable TV assets in the last decade it had been prevented by anti-trust regulators from selling them whole.
Combining Liberty Global and Vodafone’s German assets would put everything back together again, creating a monopoly in the cable market.
“The dominance in the TV market, combined with a telecommunication provider, is something I personally find very tricky for democracy,” he said.
Colao declined to give an update on the progress of the talks, which had restarted after a previous attempt failed in 2015, although the two later came together in the Netherlands.
He said the focus in Britain was to combine fixed-line and mobile services but talks on a tie-up might extend there too.
“Our priority now is to continue our plan in the UK, to start our convergence in the UK,” he said. “(But) I cannot conclude that in the future we might not also talk about the UK.”
Colao, who was one of the major business leaders called into 10 Downing Street last year to talk about Brexit, said he had advised the government not to pursue a plan of “managed divergence” from European regulations in data after Britain leaves the European Union because it would damage the economy.
Britain is believed to favour mixed approach of “managed divergence” after it leaves, whereby it will follow EU rules in some sectors and diverge from them in others. European Council President Donald Tusk on Friday called the ideas floated so far “pure illusion”.
Separately, Vodafone on Monday agreed to sell its 51 percent stake in its Qatari operations to its existing partner, the Qatar Foundation, for a total sum of 301 million euros (264.3 million pounds).
Reporting by Paul Sandle and Douglas Busvine; Editing by Jane Merriman and Keith Weir
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