Plug pulled on Vodafone swap deal talks

Vodafone was in talks with cable firm Liberty. Picture: AFP/Getty Images

Back in June, the telecoms giant had entered discussions with Liberty regarding “a possible exchange of selected assets between the two companies”.

There had even been speculation that the two were considering a merger that would have created a £100 billion telecoms giant, but Vodafone dismissed such talk. And now it appears the asset swap talks have come to nothing as well. It is the latest development in a telecoms market which in the midst of major changes as the big players try to shore up their positions.

Three owner Hutchison Whampoa is buying mobile operator O2 in a £10bn deal while telecoms giant BT is acquiring EE for £12.5bn in a transaction expected to complete next year.

There has been speculation about Vodafone’s future since its £78bn sale of its 45 per cent stake in US business Verizon Wireless, to joint venture partner Verizon, which completed last year.

San Dhillon, analyst at RBC Capital Markets, said in a note: “Interestingly, we highlight the ‘asset swap’ talks are the ones being terminated, and there was an increasing belief that a deal in this form would be unlikely anyway. Thus, in our view, it does not preclude talks resuming in another guise: a merger for instance.”

Dhillon said he was retaining his “outperform” rating on the shares with a price target of 260p, almost 30 per cent higher than current levels.

Analysts at Jefferies also said they believed the announcement wasn’t the end of the story.

“The news will surely disappoint near-term, but we think investors may come to believe it represents a delay, not the end of the process,” they said.