Britain’s Vodafone has agreed to acquire a further 73 percent stake in Greece’s broadband and fixed-line telephony provider Hellas Online for 73 million euros, to help it better compete in the highly competitive market.
Vodafone, which bought an 18.5 percent stake in the company in 2009, said Friday the purchase would help it to offer more services to its customers in Greece and better compete with the market leader, OTE.
The company is expanding its broadband offers across Europe as Chief Executive Officer Vittorio Colao bets on the popularity of bundled mobile and fixed services. The deal builds up Vodafone’s struggling Southern Europe business, where service revenue dropped 26 percent in the last fiscal year ending in March.
Vodafone bought the shares from Intracom Group and World Equities Investments Holdings SA. The deal gives Hellas Online an equity value of 311 million euros, including debt, Vodafone said. Regulators still have to approve the deal.
Vodafone has gone after similar companies in Germany and Spain and has committed to spending 19 billion pounds improving its network in the next two years.
The combination with its Greek unit will make it the second-largest integrated phone company in Greece by revenue. Hellas Online had about 519,000 customers at the end of last year, representing a market share of around 11 percent, Vodafone said. The Greek company reported 224.2 million euros in revenue last year.
The transaction is expected to be completed in the fourth quarter of 2014, after which Vodafone Greece will own 91.2 percent of Hellas Online and be under an obligation to extend a mandatory takeover offer for the remaining shares.
In a bid to challenge OTE’s market leadership in Greece, Vodafone tried but failed in 2012 to merge with Greece’s third-biggest operator, Wind Hellas. It has also submitted a joint bid with Wind for Greece’s biggest subscription TV provider Forthnet.
Hellenic Telecommunications Organization SA (OTE), whose two largest shareholders are Deutsche Telekom AG and the Greek government, is the largest phone company in the country and reported 4.05 billion euros in sales last year.
Vodafone forecasts an annual run rate of 24 million euros in cost and capital spending savings, the Newbury, England-based company said in the statement. [Combined reports]