Vodafone's Colao 'should retire' after Liberty talks collapse, says Aviate's Campling

15th Sep 2015 12:51

(ShareCast News) - Vodafone chief executive Vittorio Colao should step down after Liberty Global walked away from merger talks, telecoms analyst Neil Campling has said, while numerous other consequences could follow.The highly respected Campling, a partner at London broker Aviate Global, said tightening of European competition regulations was part of the reason for the derailing of Vodafone and Liberty's talks and may also lead to the collapse of Three's potential acquisition of O2 from Telefonica and inject life back into bid speculation about TalkTalk and stake-building in ITV."Liberty has effectively withdrawn from the combination with Vodafone," he said, following reports of an impasse in the talks.While there may be ways to exchange some assets or set up a joint venture in some jurisdictions the full combination is now off the table, he added, with Liberty boss John Malone suggesting the two companies could not agree on a price and issues over key markets "are unlikely to be resolved".Campling noted that the UK was a key market for both companies, so an asset sale in this region was utterly unlikely, likewise Germany.A tie-up in Germany would not be easily allowed in an economically acceptable way given European Commission competition chief Margrethe Vestager's recent hardline approach."While we can find reasons to invest in Liberty Global on a standalone basis, the same cannot be said for Vodafone," Campling said."Today, Vodafone is a disparate network of mobile only offerings in multiple markets offering no competitive advantage, no scale opportunities, few synergies, no converged services and certainly no quad-play."What's next? Vittoria, surely, will retire and head for the sunshine/ski slope. He should." Futher TMT fallout The tough regulatory line being trodden by the EC's Vestager recently forced Telenor and TeliaSonera to abandon Danish merger plans and on Tuesday morning the Commission extended the deadline on Liberty's pending acquisition of KPN's BASE Belgian mobile unit, which Campling called "another very cautionary signal" with regard to deals in the sector.One upshot, fuelled by the Vodafone-Liberty collapse, is that there could be renewed focus on TalkTalk bid speculation, he added, which would be supported by the reduced likelihood of a strong UK converged competitor emerging.He speculated that if BT escapes the regulatory clutches of Ofcom in the UK and Vestager in Brussels then the company will have a clear lead in the multi-play commercial strategy post completion of the EE acquisition, which could "perhaps" result in Liberty making a renewed M&A moves to buy greater influence on the content with an increase to the stake building in ITV, in which Liberty in July upped its holding to 9.9%.The EC's new hardline approach may also see the renewed questions about the O2-Three deal in the UK."This would be negative for Hutchison's global ambitions and Telefonica's refocused market efforts."