Reports that Liberty Global has put its fixed-line and television operator Virgin Media Ireland up for sale for €1.5 billion raises the spectre of another private equity feast on the Irish telecoms industry.
With no substantial mobile offering beyond a modest network piggyback deal with Three, Virgin lacks scale in the Irish mobile sector and that made it an odd one out in Liberty Gobal’s stable of mobile-fixed convergence offerings.
The decision to sell the Irish unit appears to have been taken following the £31 billion merger of Virgin’s operations in the UK with mobile operator O2. There was no corresponding Irish part to this move, as O2 was gobbled up over here by Three eight years ago.
News of a sale of Virgin’s Irish operation was first reported in the Sunday Times, which suggested that Liberty Global first went round the houses of the Irish mobile operators seeking to buy out one of them. With Vodafone, Three and Eir seemingly unwilling to sell, Liberty chief executive Mike Fries appears to have then decided to offload an asset he lauded as a “champion” just a week ago.
Eir has no chance of buying Virgin, due to obvious competition issues in the fixed-line market. Vodafone, which might fancy Virgin’s television stations, is a more likely suitor but it is already involved in a fixed-line joint venture with ESB in Siro. It would be a strategic pivot to also take on Virgin, with which there would be substantial overlap
The Hong Kong-owned Three business, which previously tried to buy Eir out of examinership, seems the most likely trade suitor for Virgin. However, it might not be prepared to pay the frothy multiple of almost 10 times earnings that applied to the UK Virgin-O2 deal.
Lack of a trade buyer could pave the way for a private equity deal. And there is plenty of cash out there looking for a home. Moreover, this could lead to a carve up of Virgin’s assets or perhaps even another attempt to combine it with one of the mobile operators. Stay tuned for updates.
