Vodafone's share price rose this morning after the telecoms giant confirmed it was buying broadband businesses in Germany, the Czech Republic, Hungary and Romania for €18.4bn (£16.1bn).
The deal with Liberty Global will result in the phone giant becoming the leading next generation network (NGN) owner in Europe, with 54 million cable/fibre homes 'on-net' and a total NGN reach of 110 million homes and businesses, including wholesale arrangements.
The firm said the move would create a national challenger to the "dominant incumbent" in Germany, Deutsche Telekom, "with the scale to accelerate achievement of the German government's digital ambitions". This includes bringing Gigabit connections to around 25 million German homes - nearly two-thirds of German households - by 2022.
The deal will also bolster Vodafone's existing mobile operations in the Czech Republic, Hungary and Romania so it reaches more than 6.4m homes, or 39 per cent of total households.
Management and employees of the acquired businesses "will have the opportunity to play an integral role within the combined company in each country and across the wider Vodafone Group", it said.
However it expects to strip out roughly €535m in costs each year within five years after completion, with an estimated net present value of more than €6bn after integration costs.
Estimated revenue synergies are likely to exceed €1.5bn. The deal values the acquisitions at a multiple of 8.6 times EDBITDA, adjusted for costs and synergies, or 10.9 times before synergies.
Vodafone intends to finance the acquisition using existing cash, new debt facilities including hybrid debt securities, and around €3bn of mandatory convertible bonds.
Subject to regulatory approval, the deal is expected to complete in the middle of next year.
Investors backed the move, with Vodafone's share price up 1.5 per cent in morning trading.
Vodafone Group chief executive Vittorio Colao said: "This transaction will create the first truly converged pan-European champion of competition. It represents a step change in Europe's transition to a Gigabit Society and a transformative combination for Vodafone that will generate significant value for shareholders.
"We are committed to accelerating and deepening investment in next generation mobile and fixed networks, building on Vodafone's track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators.
"Vodafone will become Europe's leading next generation network owner, serving the largest number of mobile customers and households across the EU."
Deutsche Telekom criticised the deal - although stopped short of calling for regulators to block it.
“I personally will fight for fair competition for our customers, to ensure that we do not face a disadvantage, and can fight with the same weapons,” chief executive Tim Hoettges told reporters in a call to discuss the firm's first-quarter results.