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    Dealers on hold for Vodafone bid as speculation intensifies

    This is a discussion on Dealers on hold for Vodafone bid as speculation intensifies within the Sky Rumour Mill forums, part of the Sky news and announcements category; MARKET REPORT: Dealers on hold for Vodafone bid | This is Money Merger and acquisition activity in the UK this ...

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      Dealers on hold for Vodafone bid as speculation intensifies

      MARKET REPORT: Dealers on hold for Vodafone bid | This is Money
      Merger and acquisition activity in the UK this year has been a big disappointment.

      The number of corporate deals has slumped to the lowest level for eight years and below the ‘dotcom’ levels of 13 years ago.

      It would certainly be the perfect start to 2014 if a multibillion-pound bid for a Footsie constituent suddenly materialised as soon as dealing rooms returned to normality after the long festive season

      For weeks, if not months now, dealers have heard that it is not a matter of if, but when, AT&T bids for Vodafone, 1.45p dearer at 236.15p.

      Persistent gossip from across the Pond has suggested that the US giant has been laying the groundwork for a potential takeover which if successful would create the world’s largest telecoms operator by sales.

      Speculation intensified after Vodafone banked £80billion from selling its 45 per cent stake in Verizon Wireless. Chief executive Vittorio Colao pledged to give 71 per cent of proceeds (£52billion) back to shareholders, but that still leaves a heap of cash for him to play with.

      Colao has in the past hinted that he would like Vodafone to branch out into TV. This has led to growing rumours that he could make a play for satellite TV group BSkyB, 18.5p better at 812.5p. The intention would be to bundle its broadband, TV and landline offerings with Vodafone’s mobile services.

      A successful bid for BSkyB would also be a perfect defensive move against a bid for itself from AT&T or anyone else. But Colao would have to pay well north of £12 a share to gain agreement from Rupert Murdoch.

      BSkyB has 10.4million subscribers. Its HD service added 107,000 subscribers to 4.9million during the first-quarter. Over a third of the Sky customer base are now using the triple play offering of TV, broadband and telephony.

      BSkyB’s shares fell in November on news that BT (0.3p easier at 376.5p) has secured exclusive rights to the Champions League and Europa League Football from 2015 to 2018, paying £299million per season for the privalege. But they soon recovered when analysts were relieved that BSkyB’s management had not paid over the top for the rights.

      The overall volume of business left a lot to be desired as many dealers wound down in City watering holes before the Christmas break. Nevertheless, the Footsie was still very festive, rising 72.03p points to 6,678.61, while the FTSE 250 rose a further 105.08 points to 15,741.67. Wall Street didn’t disappoint the bulls either, closing 73.47 points higher at a new record of 16,294.61.

      Sentiment on the Street of Dreams was helped by news that Apple had secured a deal with China Mobile to sell phones through the world’s biggest mobile phone network. ARM Holdings jumped 42p to 1,110p as buyers switched on to hopes that ARM could receive more orders from major client Apple. ARM’s chip designs power more than 95 per cent of smartphones and most tablets.

      The John Lewis store said it sold one iPad every 10 seconds at its stores during the past week. The year’s most controversial flotation Royal Mail began life in the Footsie and immediately succumbed to profit-taking. The close was 11p down at 580p but still 76 per cent up on the ridiculously cheap IPO price of 330p.

      Equipment rental group Ashtead suffered a similar fate on debut. It cheapened 9p to 764.5p after rubbing shoulders with the elite for the first time. JD Sports Fashion came on offer and lost 150p to 1344p on talk that Christmas trading so far had been disappointing.

      Reflecting the current UK house price boom, estate agency Countrywide put on 18.5p to 560p. Hovis-to-Mr Kipling group Premier Foods cheapened 5p to 125.5p on £300million fundraising fears. The company yesterday confirmed it is weighing up a possible rights issue. The group’s bank debt and revolving credit facilities are in place until mid-2016.

      Serco, the international service group, advanced 13.2p to 485.2p after securing a six-month extension to its contract with Australia’s Department of Immigration and Border Protection for detention services at on mainland Australia and Christmas Island.

      Punters chased TomCo Energy, the oil shale exploration and development company, 26p higher to 1.40p on the announcement that the Utah Division of Water Quality has issued fellow developer Red Leaf Resources, a Groundwater Discharge Permit.

      Gold producer Minera firmed 0.12p to 11p following the discovery of two new epithermal veins in close proximity to their Don Nicolas gold project, Argentina-Don Nicolas is funded to first production in the first quarter 2015.

      After acquiring a 40 per cent stake in the Pallancata mine and Inmaculada Advanced Project in Peru, Hochschild Mining improved 2.05p to 125.25p. Sound Oil gushed 0.25p to 6.88p after confirming the award of the Santa Maria Goretti permit from the Italian Ministry of Economic Development.


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      Re: Dealers on hold for Vodafone bid as speculation intensifies

      Sky are looking a bit small in the current market. Maybe a big merger would help, especially a cash deal as opposed to the type of leveraged buy-out of VM by Liberty Global.

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      Re: Dealers on hold for Vodafone bid as speculation intensifies

      Whilst BSkyB may look small, the brand 'Sky' isn't just limited to the UK.

      Off the top of my head I can think of a 'Sky' presence in Germany, Italy, India and the Philippines. Without fully researching it, I would suspect that they are all linked somehow.

      Whilst News International, with Rupert Murdoch wanting more choice of TV Channels, was the main reason for Sky starting up, it has since become it's own firm with a strong branding in the UK and Ireland.

      However it isn't too difficult to see what the possible benefits of merging Vodafone UK with BSkyB. Both have broadband requirements. Both have an established telephone network. Vodafone do not currently have their own WiFi Hotspot system, using BT's system instead. Linking in with Sky would give their customer base access to The Cloud and also pump more money into The Cloud for further expansion. Of course at present Vodafone are also offering the ability to view Sky Sports for free with many of their current tariffs.

      Will it be good for the customers overall though?

      I do think that BSkyB has an interest in getting into the mobile market. BT PLC sold their BT Cellnet brand, which had become O2 a few years before (2002) to Telefonica in 2005. Now Three is reportedly looking at acquiring O2 from Telefonica. VM do have their own mobile packages. Of course TalkTalk has their own Mobile division which was created by Carphone Warehouse.

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      Re: Dealers on hold for Vodafone bid as speculation intensifies

      I suppose this would give Sky a full quad service to compete better with BT and Virgin as didn't BT sign some kind of deal with EE earlier this year as well as purchasing some 4G.

      Sky would then be able to offer a mobile service as well as everything else, though it's not something I'd consider as VF offers appalling service here where I live.

      I know I've said this before but I have never understood why Sky haven't yet gone into the mobile network market even as a MVNO.

      There are still also rumours swirling around about Hutchenson 3G (Three Uk) sniffing round O2 UK (they bought O2 Ireland earlier this year) as Telefonica are still loosing money hand over fist. If approved, would essentially leave Vodafone out on their own. Though with the current MBNL 3G RAN share between EE and Three as well as the cornerstone O2 and Vodafone mast sharing thing would make things very complicated!!

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      Re: Dealers on hold for Vodafone bid as speculation intensifies

      If Vodafone were to takeover Sky, what would happen?

      Alternatively if Vodafone and Sky were to launch a joint venture, would Vodafone drop their broadband package in favour of Sky or would they move their broadband customers to Sky's LLU kit? What too would happen with Vodafone's mobile Internet packages?

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      Re: Dealers on hold for Vodafone bid as speculation intensifies

      thinkbroadband :: Could Sky be moving towards merger with a mobile operator?
      The world of mergers and acquisitions is almost like a continuation of the gossip chain at school, but with much larger sums of money involved. It appears some analysts are suggesting that Sky could merge its European operations under a Sky Europe banner and may also see the operator move into the quad play arena via a merger with Vodafone or Telefonica.

      Back in 2013 BSkyB purchased the fixed line telephony and broadband arm of O2 UK, and the increasing number of ways that Sky content can be accessed via mobile networks makes the idea of also becoming a mobile operator compelling.

      BSkyB is currently the number two retail broadband operator in the UK, but is only likely to catch BT Retail within the next year if demand for Sky Fibre increases dramatically. A broadband market where BT Retail is not the dominant retailer would make for some interesting discussions at Ofcom.

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      Re: Dealers on hold for Vodafone bid as speculation intensifies

      Sky and Vodafone UK in Possible Merger or Joint Collaboration Talks - ISPreview UK
      Last week’s speculation that BSkyB (Sky Broadband) could potentially merge with O2 or Vodafone UK (here) might have been based on some truth. A new report indicates that Vodafone and Sky have held joint high-level talks concerning a collaboration against BT, which could take any one of several different forms.

      According to the Sunday Times (paywall), “senior sources” have told the newspaper that both operators are looking to build a better defence against BT, which has recently begun to tackle Sky on its home turf (TV) by offering some of the same content (Sports – Premier League Football etc.) for free to their existing broadband subscribers. BT are also expected to launch some form of 4G based mobile service, with EE’s help, later this year but have remained coy about the specifics.

      Vodafone could gobble Sky if it wanted but for now the two appear to be exploring some form of collaboration, which could involve an agreement for Sky’s sports and movie channels or a new broadband service of some sort. However, the idea of rolling out an alternative fibre optic broadband network has sadly been deemed “unlikely” to happen (this doesn’t mean it won’t).

      It’s interesting to note that Vodafone closed its own ‘At Home‘ fixed line consumer broadband service in 2011 after failing to make a success of it (here), although they recently reacquired a significant national LLU broadband and business focused fibre optic network when they gobbled Cable & Wireless (here).

      But since then Vodafone has shown no real interest in getting back into the Home Broadband market (except as a supplier) and nor does it have a TV service, which isn’t so unusual for mobile operators in the United Kingdom. O2 has similarly failed to make a Home Broadband service work and thus sold their customers on to Sky. Meanwhile Three UK remains purely mobile focused and EE is still struggling to make a long-term success of their fixed line platform.

      Suffice to say that Vodafone, while no doubt keen to take on the other quad-play providers, has so far tended to stick to what it knows best and we’d be surprised if that changed. We can however see scope for new capacity supply deals and mobile services, which would make Sky a quad-play provider. Meanwhile Sky’s existing LLU broadband platform appears to be superior to the one that Vodafone peddles to other ISPs. In any case no deal has been reached and the talks are said to be continuing.

      As an important side note, it’s worth mentioning that Vodafone recently got around £50bn ($84bn) from the sale of their American business (i.e. a 45% stake in Verizon Wireless). This means that there’s plenty of cash floating about to do something radical.

     

     

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