UPC Netherlands merging with Ziggo makes sense given the developments on the Dutch market. Both operators see increasing competition from DSL and fibre service providers luring away cable TV customers to new triple-play offers. Merging the two regional networks would create a cable operator with increased scale, strengthening its ability to compete and restore growth.
The question remains whether the Dutch regulator ACM would approve the acquisition. The cable operators’ declining share of the TV market may work in their favour. However, approval could be tied to the obligation to open up their networks for third parties to offer TV services. An end to the asymmetrical regulation of cable and telecom networks could see the cable operators accessing KPN’s DSL and fibre networks to offer their services and KPN starting services on cable networks.
Meanwhile in Germany, Liberty Global is facing problems with the acquisition of cable operator Kabel BW by its subsidiary Unitymedia. The takeover was blocked retroactively by a German court following complaints from Unitymedia’s competitors. While Unitymedia has said it will appeal the ruling, it may have to unwind the takeover if its appeal proves unsuccessful.
Awaiting that decision, Liberty Global’s focus appears to have shifted to the Netherlands and a possible takeover bid for all of Ziggo. This is in line with its stated expansion strategy and efforts to remain the largest cable operator of the world. The operator has been claiming this status since the acquisition of Virgin Media in the UK was completed in June 2013.
