Anyone suggesting that Liberty Global is putting itself in a better place to merge lock stock and barrel with Vodafone, by selling off its Austrian and Swiss business, should think again. The biggest block to doing an across the board merger is how strong the business would be in Germany and this does not affect that one iota.
The UK Telegraph ran a story this week suggesting that Liberty Global is looking for a buyer for those Austrian and Swiss assets and while this may well be the case, it will be simply because the two properties are closest to maturity and hardest to grow. Switzerland is up against a rejuvenated Swisscom, and losing video subscribers quite rapidly, and yet not making up for them with broadband; while in Austria progress is at best flat.
Cleary the UK and Germany are the stars of the Liberty Global show, growing broadband in particular very rapidly, and Belgium, where it still does not have 100% ownership, has a massive cellular operation to fall back on.
Central and Eastern European operations, where both costs and income levels are much lower, are still showing growth and in Latin America and the Caribbean, these markets are the least penetrated.
If someone had approached Liberty Global with a view to buying the Austrian and Swiss operations, we would say it would always listen to a sensible offer, but cannot see how this relates to selling the entire business to Vodafone. The one part of Liberty Media that it makes sense to sell to Vodafone is its UK Virgin Media operation, because Vodafone there would not be dominant in either broadband or pay TV, and should get it past regulators. And yet Vodafone has always been reluctant to pursue this.