­Vodafone is reported to be in talks which could lead to a €2.8 billion take-over of the German cable TV operator, Kabel Deutschland (KDG). The company is currently owned by the private equity group, Providence - which brought the company three years ago.

 KDG has around 11 million customers in Germany and would be a good fit with Vodafone's local landline subsidiary, Arcor which controls about 14% of the broadband market.

KDG announced increased second quarter revenues last week, by 15.4% to €339.3 million while EBITDA increased 30% to €142.9 million. The higher numbers are partly attributable to the networks acquired earlier this year from the Orion Cable Group.

The firm recently confirmed that it was taking another look at trying to acquire some smaller regional operators. In 2004 KDG tried to buy two cable operators serving regional areas, which would have given the company nationwide coverage, but the deal was blocked by the cartel office amid fears of the company gaining a dominant market position. Changes in the market place with the emergence of telcos providing TV services should make cartel fears easier to overcome.

“A nationwide cable operator would enhance competition vis-à-vis the large telephone incumbents which would also be in the best consumer interest. We want to play a leading role in any such market consolidation,” KDG's CEO, Adrian v. Hammerstein said when the company announced its financial results last week.

Kabel Deutschland was founded in January 1999 by Deutsche Telekom, after it was ordered to spin off its entire cable TV business as required by regulatory terms.

For historic reasons, Kabel Deutschland cannot offer its products directly to all are connected via Kabel Deutschland's network, since only one third of all viewers are direct customers. In the early 1980s, when the cable network was originally established, Kabel Deutschland's predecessor Deutsche Bundespost had to leave in-house cables to other companies or the house owners. This turned out to be a significant obstacle since Kabel Deutschland now has to make single contracts with hundreds of small cable operators.

Source:cellular-news