By Toby Sterling
AMSTERDAM (Reuters) - UK mobile phone operator Vodafone Plc (L:VOD) and John Malone's cable company Liberty Global Plc (O:LBTYA) agreed on Monday to combine their operations in the Netherlands in a bid to gain a stronger presence in the local market.
Vodafone will pay 1 billion euros ($1.1 billion) cash to Liberty to equalise their stakes in the venture, which will rank as the second-largest telecoms company in the Netherlands after former incumbent KPN (AS:KPN).
It will also create a stronger competitor to smaller players Tele2 (ST:TEL2b) and Deutsche Telekom (DE:DTEGn) unit T-Mobile.
U.S.-based Liberty's Ziggo is by far the largest cable TV operator in the Netherlands, while Vodafone is the second-biggest mobile network operator behind KPN.
Vodafone has faced increasing pressure in national markets from former telecoms network monopolies such as Deutsche Telekom, Telefonica (MC:TEF), KPN and BT (L:BT), which are able to sell packages of broadband Internet, TV and mobile telecoms services.
In the Netherlands Tele2 is attempting to scale up its operations, while Deutsche Telekom has been attempting to sell T-Mobile to private equity investors and exit the market.
Earlier this month, Vodafone said it was in talks with Liberty about the joint venture in the Netherlands, after the companies could not agree on a larger tie-up or exchange of assets last year, a deal that could have covered as many as seven European markets.
The Dutch joint entity would have had 2015 sales of 4.41 billion euros and operating profit of roughly 1.9 billion, the companies said.
The companies said they would see savings of 280 million euros per year from the fifth year after the closing of the deal, which they expect towards the end of 2016.
