Greek Telecoms Future Hangs On Vodafone's Next Move
BMI View : The future of Greece's telecoms market hangs on Vodafone's plans for Forthnet. The company seems poised to acquire the alternative wireline operator as part of its convergence services strategy. Its increased power will force smaller investors to accrete around it or incumbent OTE. Paradoxically, a smaller palette of service providers would accelerate product development, benefiting consumers.
Vodafone and WIND Hellas have jockeyed for control of Greece's largest alternative wireline player since it undertook a capital increase at the start of 2014; between them, they currently own 39.5% of the company. We had expected Vodafone to push WIND to one side in order to acquire Forthnet and add its extensive broadband infrastructure and Nova pay-TV business to Vodafone's mobile operations and give it the scale needed to compete with the domineering incumbent ( see 'Greek Consolidation Consistent With Vodafone's European Strategy', April 9 2014). However, OTE subsequently offered to buy Forthnet's TV business to augment its faltering IPTV offering; it seems this has forced Vodafone and WIND to work together.
Reportedly, Vodafone and WIND have offered Emirates International Telecommunications-owned Forgendo as much as EUR500mn (USD677mn) for the whole of Forthnet in order to fend off OTE's EUR300mn offer for Nova. The latest offer will appeal to the Arabian investors, who are aware that economic and market conditions, as well as OTE's scale, are weighing on the alternative players' long-term survival prospects. Losing Nova to OTE lacks appeal as the TV business is a significant growth engine for Forthnet ( see 'TV Turns Forthnet Around', May 30 2014).
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