(Bloomberg) -- The CEOs of two of Europe's largest telecom companies are locked in a war of words over a potential merger in Germany.
Vodafone Group Plc Chief Executive Officer Vittorio Colao on Monday rebuffed concerns from his counterpart at Deutsche Telekom AG over the U.K. mobile carrier's potential tie-up with Liberty Global Plc in Germany. Deutsche Telekom's Tim Hoettges vowed to try to block any deal last week, arguing that regulators won't and shouldn't clear a merger because it would create a “monopoly” in parts of Germany's TV market.
“I have to be careful not to become personal on this one,” Colao told reporters Monday at Mobile World Congress in Barcelona. “I look at our results versus theirs and it seems that maybe he is a bit nervous.”
The debate pits Hoettges's dominant European telecom operator against Vodafone, the world's second-largest mobile carrier, and a cable company controlled by billionaire John Malone. Deutsche Telekom has the most to fear about Vodafone's talks to buy some of Liberty Global's European continental assets. A tie-up in Germany would double the cable footprint of Vodafone, which already competes with Deutsche Telekom on wireless services.
Colao said Vodafone buying a regional cable company in Germany would not lead to the threat identified by Hoettges.
“Why buying a regional cable company irritates him -- maybe I know why it irritates him -- but that's not for the right reasons,” Colao said.
Impact on Democracy
But Hoettges stuck to his argument on Monday. He reiterated concerns about a cable monopoly in Germany and said a deal would have a potential negative impact on democracy.
“Dominance in the TV market combined with a telco provider is something I personally find very tricky for democracy,” Hoettges told reporters.
A deal with Liberty in Germany would see Vodafone pick up some assets previously owned by Germany's former phone monopoly, which was forced more than a decade ago to sell the national cable network by the cartel office and divested it in regional blocks. Analysts have largely suggested it would win regulatory approval, most likely by European authorities, even if Vodafone has to sell some assets to satisfy competition concerns.
Vodafone earlier this month said it's in talks with Liberty Global to buy some of the cable company's continental assets in markets where their businesses overlap, leaving out the U.K. The talks between follow years of on-and-off-again discussions the companies about potential tie-ups. Colao said Monday that a U.K. deal could come later.
The companies have both been seeking to bolster their holdings of fixed and wireless assets in Europe to offer subscribers service bundles. Vodafone has also been scaling back from some international markets to focus on its core European holdings.
Vodafone on Monday said it would sell its 51 percent stake in a joint venture in Qatar to its partner, Qatar Foundation, for about 1.35 billion Qatari Riyal ($370 million).
To contact the reporters on this story: Joe Mayes in London at jmayes9@bloomberg.net, Stefan Nicola in Berlin at snicola2@bloomberg.net.
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Giles Turner
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