Boston, MA 08/25/2014 (wallstreetpr) – Vodafone Group Plc (ADR) (NASDAQ:VOD), the second-largest wireless operator in the world by subscriber numbers, agreed to pay 72.7 million euros or $97 million in cash to purchase Hellas Online, a Greek telecom firm. The development is expected to help Vodafone increase its market share in the southern Europe market.
A majority stake
With the $97 million investment, Vodafone would have 91.2% stake in Hellas when the deal is completed. It already owns 18.4% in the business, which turned it into a minority holder in the business in 2009. It is now acquiring another 72.7% from two other investors in Hellas, namely World Equities Investment Holdings and Intracom Group. Vodafone expects to complete the latest deal in 4Q if it gets regulatory clearance for the same.
According Vodafone Group Plc (ADR) (NASDAQ:VOD), Hellas generated about 200 million euros in revenue in 2013. It added that Hellas controls 11% of the market share in Greece, and it had about 519,000 subscribers for fixed-line and broadband as of the end of 2013. Vodafone said the deal with Hellas would create a leading telecom operator with the second-largest revenue in the market, providing mobile and fixed-line communications. Furthermore, Vodafone expects its bigger stake in Hellas would make the business more effective in the Greece telecom market.
Competition and soft spending
Having given up its 45% stake in Verizon Wireless for about $130 billion, Vodafone Group Plc (ADR) (NASDAQ:VOD) has been spending billions of dollars in assets acquisition and network upgrades. All these have been happening as the company tries to shore up its wireless business that is facing increasing competition. The business is also impacted by the softness in customer spending. The southern Europe is one particular market that Vodafone has faced flagging wireless opportunities, and the purchase of Hellas would be a step in the right direction for the company in the southern Europe region.
In the acquisition of Hellas, Vodafone Group Plc (ADR) (NASDAQ:VOD) expects about 20 million euros in capital expenditure and cost synergies by the third year of the deal’s completion.
