Europe is trending towards “national champions” as convergence creates two or three service provider leaders in each market, according to Liberty Global CEO Mike Fries.
Speaking at Deutsche Bank’s Annual Media, Telecoms and Business Services Conference, Fries said that it was Liberty’s goal to either be one of these ‘national champions’ or to enable one by doing deals.
“We need fixed infrastructure, fibre-based infrastructure, high margins, great reach, great products, [with] the convergence that’s obviously occurring,” said Fries in response to a question about Liberty’s recent decision to sell cable operator UPC Austria to T-Mobile Austria.
“There are going to be opportunities where private and public market multiples don’t align and where we might actually look at exiting markets where we’re sub-scale. That was an example of one,” said Fries.
Addressing Liberty’s current talks with Vodafone, Fries said that it’s “too bad that has to be a public conversation” but confirmed that “those conversations are ongoing and we’ll see if something comes out of it.”
“When we step back and look at what we’re doing here, we are trying to create value for you guys, for shareholders,” said Fries. “We are not about building empires, we’re about creating value.”
Vodafone confirmed last month it was in early stage discussions with Liberty Global about potentially acquiring “overlapping continental European assets”.
According to press reports the discussions are focused on Liberty’s cable assets in Germany – where Liberty’s Unitymedia is the number two cable provider behind Vodafone – though the two companies also have overlapping operations in the Czech Republic, Hungary and Romania.
Subsequent reports have also suggested talks could extend to assets in the UK, where Liberty owns cable operator and Sky rival, Virgin Media.
Discussing Comcast’s recent £22.1 billion (€25.0 billion) offer for Sky in the UK, Fries predicted that whoever comes out as the winning bidder, Sky will probably emerge “more rational over the next five years” as a result.
“That’s a positive thing for the competitive dynamic in the UK, which is obviously something we watch closely,” he said.
Fries added that he sees Comcast’s interest in Sky as “more about content, quite frankly, than it is about distribution,” describing NBCUniversal as a “small supplier” of content in Europe.
Moving on to discuss Liberty’s own content strategy, Fries said the company is focused on being a “meta aggregator” of great content across all devices and distribution methods – including linear, digital, free-to-air and over-the-top.
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