Vodafone going Dutch with cable firm Liberty Global

Vodafone is to merge its Dutch business with that of rival Liberty Global. Picture: Chris Ison/PA

Mobile phone giant Vodafone has sealed a deal with Virgin Media owner Liberty Global to merge their Dutch businesses.

The company said the joint venture would forge a stronger Dutch internet and mobile operator by bringing together Vodafone’s mobile operation with Liberty Global’s Ziggo broadband network.

Subject to regulatory approval, the deal is expected to be sealed by the end of this year and will see Vodafone making a cash payment of €1 billion (£772 million) to Liberty Global to “equalise ownership in the joint venture”.

The companies predict the total cost and revenue synergies will hit €3.5bn, with costs of about €350m to combine the Dutch businesses.

Vodafone group chief executive Vittorio Colao said the deal would create “a strong and competitive integrated communications player” which would invest in digital infrastructure and entertainment services.

He added: “Together we will be a stronger competitor in the Netherlands, benefiting customers of both companies and the market as a whole.”

The announcement comes after the two companies scrapped previous plans for assets swaps across Europe in late September.

Vodafone had always dismissed talk of a full-blown merger, but first sparked rumours of a £100bn deal when it said in June last year it had entered discussions regarding “a possible exchange of selected assets between the two companies”.

Liberty Global is controlled by US cable tycoon John Malone and the group bought Virgin Media in 2013 for $23.3bn (£16bn), creating Europe’s largest broadband operator.

Chief executive Mike Fries said the “powerful combination” would deliver huge benefits to Dutch consumers and businesses.

Vodafone notched up its sixth consecutive quarter of revenue growth, lifted by a strong performance in the emerging markets, when it updated to market earlier this month.

The Newbury-based group reported that organic service revenue - a closely-watched measure of sales - had risen 1.4 per cent to £9.2bn in the three months to the end of December, beating the 1.2 per cent rise seen in the previous quarter.

It was buoyed by “strong” service revenue growth in its India and South African businesses, and said it was on course to hit full-year earnings before interest, tax, depreciation and amortisation of between £11.7bn and £12bn.