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Vodafone deal is ‘incredibly positive’ for competition, says Fries

Liberty Global’s planned sale of its German unit to Vodafone is “an incredibly positive transaction for consumers and for competition” and there is no justification for claiming that it threatens competition, as Deutsche Telekom CEO Timotteus Höttges has done, according to Liberty CEO Mike Fries.

Liberty Global CEO, Mike Fries

Speaking to analysts after Liberty announced the deal and its quarterly financials, Fries said that “there’s only one dominant provider in Germany that currently controls over half the broadband market with national fixed and wireless networks”. Apart from Deutsche Telekom, he said, the other players in the market, including Liberty’s Unitymedia, are “fragmented”. He said that the German broadband markets was “screaming for investment, consolidation and convergence”.

Fries said that Vodafone and Liberty Global in Germany would still be “half the size of Deutsche Telekom” and pointed out that Vodafone and Unitymedia do not have overlapping networks and do not compete in cable currently.

Fries said that Deutsche Telekom itself “just happens to be pursuing the same strategy” as Vodafone and Liberty in neighbouring Austria, where it has acquired Liberty’s local cable business to complement its own mobile presence.

Fries said the companies would notify the European Commission of the transaction “as soon as possible” but that he did not expect the deal to be referred back to the German regulator. He said it made sense that such a significant deal should be approved at EU level.

Fries said he did not believe that mandating wholesale access to cable networks, which has been applied in Belgium, was a necessary or appropriate regulatory remedy in Germany “or quite frankly anywhere”.

He said that the German market “needs a proper challenger” that can operate with scale and provide convergence, investment and innoviation “that hasn’t really occurred” in that market.

On Telekom’s argument that a combined Vodafone-Unitymedia would dominate video delivery, he said that the video market was highly competitive in Germany, with both Netflix and Amazon developing a strong presence, but that half of viewers still did not have access to functionality such as catch-up TV.