Vodafone mulls increase in Greek stake with Wind buy

30 August 2011 | Guy Matthews


Mobile operator Vodafone has been investigating a possible merger of its Greek subsidiary with rival Balkan cellco Wind Hellas Telecommunications.

The deal, if successful, would create a new leader in the Greek mobile market to rival current number one Cosmote Mobile Telecommunications, which is co-owned by Deutsche Telekom and Greek incumbent telco OTE. Vodafone Greece is at present Greece’s second biggest mobile service provider, with Wind Hellas in third place.

UK-based Vodafone has not commented in detail on the prospective merger, save to say that talks are at an early stage. Wind Hellas is thought to be worth in the region of 1bn Euro.

Wind Hellas, which claims to have around four million subscribers to a mix of mobile and fixed line services, was until recently a part of the Weather conglomerate, owned by Egyptian billionaire Naguib Sawiris. Weather initially acquired Wind Hellas out of an earlier bankruptcy.

The deal, say analysts, would render the Greek mobile market back to a duopoly, and dampen a price war that has lowered consumer tariffs to what many regard as unsustainably low levels.

“Tariffs have [lowered] both due to competition as well as regulatory mandated reductions in mobile network termination tariffs,” said analyst Henry Lancaster of the Buddcomm consultancy. “With penetration levels at saturation, mobile network operators have been attempting to grow revenue through increasing average revenue per user, primarily by introducing segmented offerings and launching aggressively-priced mobile broadband services with bundled data allowances, made possible due to earlier deployments of HSPA networks.”

There is some doubt however about the appetite for higher tariffs in a country that is battling heavy austerity measures in the wake of two major bailouts from Greece’s EU partners. Higher taxes and lower wages and pension payouts have substantially reduced consumer spending power.

Market watchers have also warned that now may not be the right time for any outside investor to increase its exposure to Greece’s wayward economy when the country’s own industrial powerhouses are struggling with a third year of recession. OTE is in talks with workers about reduced pay and expenses, and Deutsche Telekom has written down part of the value of its Greek investment.