Vodafone abandons Greece merger plans

Vodafone chief executive Vittorio Colao had warned that the world’s largest operator by revenue needed to change the dynamic in Greece if it were to continue to invest in the country, but yesterday’s announcement will prove more serious for Wind in the short term.

The third-biggest Greek telecoms operator is owned by its bondholders and needed a deal to better compete in the market that has been hit by extreme pressures on consumer spending. It could still reach a network sharing deal with Vodafone.

“Vodafone Group and Largo Limited, the sole shareholder of Wind Hellas, confirm that they have agreed to terminate discussions relating to a potential business combination between Vodafone Greece and Wind Hellas,” the group said in a brief statement.

Vodafone said in August that it was exploring a potential co-operation with Wind in a move that would have reduced the overall market from three players to two.

Both businesses were struggling against cell phone market leader Cosmote, a unit of former state monopoly OTE, and analysts and investors had watched the situation closely to gauge the mood of regulators in the face of such tough trading.

OTE is controlled by Deutsche Telekom. Vodafone announced a writedown on the business in November for £451m, following an earlier writedown of £800m. Market leader OTE said in November that it would support the planned merger, and that it expected the regulator to agree.

Vodafone made the short announcement without giving a reason for the decision, although the two groups had decided that they would struggle to get the deal past European regulators, a source said.