Vodafone abandon merger with Wind Hellas

A plan to merge the operations of Vodafone and Wind Hellas in Greece has been abandoned.

Mobile phone giant Vodafone said in August it was exploring a merger with the Greek operator, which would have reduced the overall market from three to two companies in the crisis country. Vodafone's chief executive Vittorio Colao said that it would need to change its strategy in Greece if it were to continue to invest.

However, Vodafone announced on Monday: "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 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.

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 £450 million, following an earlier writedown of £800 million. 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 on Monday without giving a reason for the decision.

Mobile operators have struggled in recent years in mature European markets, where increasing competition and pressures on consumer spending have pushed down on tariffs at a time when investment is needed in networks to support data-hungry devices, such as smartphones.

In the UK, Deutsche Telekom and France Telecom merged their operations to form the joint venture Everything Everywhere, taking the market from five to four operators, and further consolidation was announced in Austria last week.