Vodafone said to be in talks with Altice about buying Portugal's Cabovisao

Vodafone reportedly held initial talks with Altice about buying Portuguese cable operator Cabovisão, after the cable and telecoms group agreed to sell its two existing businesses in Portugal in order to win European Union approval for its acquisition of Portugal Telecom.

Citing unnamed sources, Bloomberg reported Vodafone is one of several companies considering a bid for Cabovisao, which the sources say has a value of around €300 million ($323 million). Other interested parties are said to include Portuguese operator NOS, and strategic and financial bidders, the Financial Times added.

The European Commission cleared Altice's €7.4 billion acquisition of Portugal Telecom this week, but said the decision was conditional upon the divestment of Altice's current Portuguese businesses Oni and Cabovisão.

Cabovisão provides pay TV, fixed broadband and fixed telephony services to residential customers, while Oni sells telecoms services to business customers. The Commission said the sale of Cabovisão and Oni would "completely remove the overlap between the activities of Altice and PT Portugal within Portugal and are therefore appropriate to address the initial competition concerns identified by the Commission."

Vodafone is known to be interested in boosting its fixed-line assets in Portugal, where it competes with strong multi-service players NOS and MEO--the new consumer brand for Portugal Telecom. The UK-based operator has already made strategic acquisitions of cable assets in other markets such as Germany and Spain.

Analysts at Espirito Santo, a Portuguese investment bank, said Vodafone was the most likely buyer of Cabovisão and Oni, the FT reported.

"We see more of a possibility that Altice may try to sell to Vodafone," the bank said in a note. "In theory such a deal would allow Vodafone to strengthen its scale in the fixed segment in Portugal, allowing it to cover 2 million households with fibre/cable and increase its market share from roughly 10 per cent to 16 per cent."

Altice first announced plans to buy the Portuguese assets of Brazil-based Oi in December last year. Following some uncertainty that the deal would go ahead, shareholders in holding Portugal Telecom SGPS (PT SGPS) finally approved the sale in January. PT SGPS is the holding company that owns a 25.6 per cent stake in the operator created by the merger between Oi with Portugal Telecom.

Altice has made no secret of the fact that it is looking at opportunities in every country where it is present and is a strong advocate of fixed and mobile convergence as well as in-market consolidation. The company also recently acquired SFR in France and merged it with cable operator Numericable

In Portugal, the sale of Oni and Cabovisão would remove the option to complement mobile assets acquired as part of the PT deal with Altice's existing cable assets. However, Portugal Telecom has a strong converged offering.

For more:
- see this Bloomberg article
- see this Financial Times article (sub. req.)
- see this European Commission release

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