'Cable Cowboy' Malone weighs his next move in Europe

Mon Jun 6, 2016 5:54am EDT
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By Kate Holton

LONDON (Reuters) - A generation after "Cable Cowboy" John Malone transformed the pay-TV sector in the United States, he is back in the spotlight -- this time in Europe, where he is plotting a role in the consolidation of the British telecoms market.

Top of the billionaire rainmaker's wish list is what would be a transformational deal between Liberty Global (LBTYA.O: Quote), the London- and Denver-based cable operator Malone chairs, and Britain's Vodafone (VOD.L: Quote). Combining their operations in Europe would create the continent's biggest communications company with broadband and mobile operations spanning several countries.

But with a market value of 61 billion pounds ($88 billion)and a wildly different approach to debt and dealmaking, the blue-chip British mobile operator, the world's second biggest, is not an easy fit.

Any attempt at a merger would also be complicated by Malone's preference for owning large chunks of the voting rights in his firms, meaning the 75-year-old may need to persuade Vodafone to swap assets or do individual market deals instead.

"John would like to do something in Europe, but he doesn't know what to do and is reluctant to give up his super votes which would be the case with Vodafone," an industry executive who knows Malone told Reuters on the condition of anonymity.

The executive added: "There aren't many deals out there. There's smallish things they could do but nothing that is transformative. Deal guys get frustrated when there aren't any deals to do."

The two companies this year agreed a joint venture in the Netherlands, a small market for both, in what was seen as a test case for compatibility after they failed to agree a deal in any other market despite months of negotiations.

The 50-50 joint venture after integration costs was valued at around 3.5 billion euros in combined revenue and capital expenditure. Vodafone paid 1 billion euros in cash to Liberty to equalize ownership.   Continued...

Liberty Media Corp. chairman John Malone arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort July 12, 2013.  REUTERS/Rick Wilking/File Photo