A Vodafone merger with the cable group would “yield considerable strategic and financial benefits”, said the financial newspaper, which describes Liberty Global chairman John Malone as a “shareholder-focused deal maker” who may be inclined to pursue such a deal “if terms can be worked out”.
Vodafone has already said it was no longer in talks with Liberty, Barron’s said, but the two companies have partnered on a joint venture in the Netherlands.
Mr Malone’s Liberty is best known here as the owner of TV3 and cable firm Virgin Media, formerly known as UPC. Liberty bought Dublin-based broadcaster UTV Ireland in July.
The company’s shares could rise for other reasons too, the newspaper said. Vodafone has managed to increase its revenue in Europe in recent quarters after eight years of decline. Vodafone shares are little changed this year.
While competition and regulations in the European market are difficult, conditions seem to have stabilised. The company has also invested $28bn (€24.9bn) over the past two years to improve its network.
The company’s operations in India, South Africa, and other developing markets are “unappreciated”, the report said, adding those markets accounted for one third of Vodafone sales.
The company’s more than 5% yield compares favorably with rivals Verizon Communications, AT&T, and Deutsche Telekom, as well as measly British government bond rates, according to Barron’s.
The company expects its cashflow to grow enough to cover the dividends it pays out.
Earlier this month, Vodafone said it would take a decision on an IPO of its Indian unit by the end of the year, though stressing that nothing had been decided yet.
“We are getting ready for the IPO in India and we will make a decision before the end of the year,” said the chief executive at Vodafone Group, Vittorio Colao.
India is the world’s second-biggest mobile phone market by subscriptions, behind China, but high competition in the crowded market has kept profits under pressure.
Last month, India’s No 3 mobile phone carrier, Idea Cellular, strongly denied a news report it was in exploratory talks about a merger with larger rival Vodafone India.
A spokeswoman for Idea’s parent, conglomerate Aditya Birla, said the report of talks between Idea and Vodafone “baseless and absolutely false”.
A spokesman for Vodafone India, India’s No 2 operator by market share, had declined to comment on the report.
Adding to the competition, Reliance Jio — a telecom venture backed by India’s richest man, Mukesh Ambani — is set to launch commercial operations in the coming months.
“Both of them are struggling with their data revenue market share and ahead of a big competitive change in the industry they might want to get bigger,” IDFC securities analyst Abhishek Gupta said of Idea and Vodafone India.
Any such deal would also face tough regulatory scrutiny and analysts say approvals would be unlikely, as the companies would breach the 50% revenue market share limit in many regions of the country if they did try to merge.