Mike Fries, President and CEO of Liberty Global, has said that German cable needs scale if it is to compete against other market players, many of whom are “twenty times larger”.
“Cable is small,” Fries told ANGA Cable TV Summit delegates, when asked to comment on redundancies arising following the Unity Media/KBW merger. “Pulling companies together makes huge industrial logic.”
He noted that whereas most other communications industry players had national or international footprints, cable was locked into small geographical areas. “If we are to compete, we need scale. Pulling two business together is a good outcome for us.”
Manuel Cubero, COO of Kabel Deutschland, also described consolidation as “good for business,” expressing his optimism that his company’s proposed acquisition of Tele Columbus would receive the necessary regulatory authorisations. “There is logic in the deal. The Level 3 and Level 4 operators will no longer exist separately. There will be competition for broadband infrastructure.”
Fries suggested that German cable had waited a long time for such consolidation to occur, but found it “curious” that when the industry had reached that point of success, having invested billions, it was made to feel guilty about it.
“Only one in eight households take broadband cable,” he noted,suggesting that it needed an external observer’s eye to see the scale of the industry in Germany. “It’s lower and slower,” he claimed. “Lower in terms of penetration, and slower in terms of broadband speed than elsewhere in Europe. That’s why smaller companies and the industry needs scale.”