Vodafone abandoned its bid to merge its Greek business with Wind Hellas after European Union competition authorities reportedly indicated their opposition to the deal.
While Vodafone simply said it was terminating discussions, the merger talks reportedly failed because EU competition regulators were worried that the merger would leave Greece with only two mobile operators, according to Bloomberg report, which cited unnamed sources familiar with the matter. Vodafone has the second largest market share in Greece and Wind Hellas is the third largest operator; both trail OTE's Cosmote.
"Mobile consolidation down to two players has never happened," Nektarios Papagiannakopoulos, an analyst at Eurobank EFG Securities in Athens, told Reuters. "Though the market thought it would have been good for the players in Greece, including OTE."
A merger would have enabled Vodafone Greece to cut operating expense and capital expenditures and after it booked an impairment loss last year of £450 million, which followed the company lowering the value of its Greek operations by £800 million.
According to Reuters, a source close to the talks said that Vodafone and Wind Hellas will now investigate other ways to co-operate and cut costs, with network sharing being a likely option. The suggestion that the EU effectively blocked this market consolidation prompted Fitch Ratings to note that this move could damage the future growth and investment prospects for mobile operators in Europe.
The rating agency said in a statement that this Greek decision implied that the European mobile network landscape is likely to continue with its patchwork quilt of three to four network owners per country, with no opportunities for any operator to significantly build market share. Fitch said the resulting decline in revenue growth prospects is negative for ratings across the sector and will hamper progress on LTE investment, as Europe falls further behind the United States and Asia on mobile data speeds.
For more:
- see this NYT article
- see this Bloomberg article
- see this Reuters article
- see this separate Reuters article
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