Vodafone said today it had made an approach to buy Germany's biggest cable company Kabel Deutschland in what could be its largest deal since 2007.
It would also mark a departure from its roots as a pure mobile operator.
Vodafone had been pursuing a possible €10 billion bid for the German firm since earlier this year, and hired Goldman Sachs to advise on options in February, sources told Reuters at the time.
"Vodafone confirms that it has made a preliminary approach to KD regarding a possible offer for the company," it said.
A deal would mark a change in strategy for the world's second biggest mobile operator that largely owns mobile networks in continental Europe and has previously had to rely on renting broadband lines from competitors.
Vodafone owns some fixed lines in Europe, including in Germany, but has only had so-called quad-play services with TV, fixed and mobile calls on superfast networks in Portugal.
The British operator struck a deal with Deutsche Telekom last month to enable it to offer pay-TV over high-speed broadband to its customers in the increasingly competitive German market, Vodafone's biggest operations excluding its joint venture with Verizon Communications.
Analysts, however, said at the time that the move did not preclude an acquisition of Kabel Deutschland.
They said there would be significant synergies available to Vodafone from migrating some of its fixed-line customer base on to Kabel Deutschland's cable infrastructure, possibly worth as much as €16 per Kabel Deutschland share.
The analysts said the deal would also help defend its market share in Germany, including against the possibility of Kabel Deutschland ramping up its own mobile offering.
"Triple play operators are increasingly taking share in mobile whereas mobile operators including Vodafone have failed to win significant share in the triple play segment. Kabel Deutschland does therefore not just represent an opportunity for Vodafone to extract synergies but also to better defend its core business,'' the analysts added.
