Brussels Sprouts Opposition to Vodafone Merger
Vodafone Group (NAS: VOD) , Greece's second-largest mobile carrier, has given up on its attempt to merge with Wind Hellas, the country's third-largest carrier. If completed, the deal would have created a Greek wireless duopoly between the current No. 1 carrier Hellenic Telecommunications and the Vodafone-Hellas combo, each with around half of the market. Hellenic is controlled by Deutsche Telekom.
However, the merger talks ended mainly because of "regulatory opposition in Brussels," according to a source quoted by Dow Jones Newswires. By Brussels, the source means the European Union, which would have antitrust oversight over corporate couplings within its member countries much as the Department of Justice and Federal Communications Commission would in the U.S.
But back in the U.K., outside of EU control, France Telekom (NYS: FTE) and Deutsche Telekom have merged to form Everything Everywhere, which is now even bigger than Telefonica's (NYS: TEF) U.K. unit, called O2, and even larger than U.K.-based Vodafone's home entity.
Vodafone has been devaluing its assets in Greece, almost $2 billion worth over the last year and a half, yet says it is still "committed to Greece," according to Dow Jones. But the carrier, during that same time frame, has been divesting itself of minority positions in some of its other foreign telecom investments, most notably in Poland's Polkomtel, in France's SFR, in Japan's Softbank, and China's China Mobile (NYS: CHL) .
The company has had success with its other foreign investments, such as with Verizon Wireless, in which it holds a 45% interest. Verizon (NYS: VZ) owns the other 55%. And Vodafone's Indian subsidiary is expected to have an upcoming initial public offering now that its long-running legal battle with India's tax authorities has been resolved. India offers great opportunity for Vodafone and the company has acquired subscribers there at a rapid pace.
A combined Vodafone Greece and Wind Hellas would have created an entity with about 8 million wireless and wireline customers, and Vodafone was hoping to use the merger as a way of bringing its costs down. But even though the companies have given up on merging, they are still exploring ways to share network infrastructure and other ways of partnering up.
At the moment Vodafone pays out a decent (if not spectacular) dividend yield of about 3.5%, but there are arguably better plays for dividend investors. For a report The Motley Fool has put together of other stocks paying solid dividends, just click here to access your free copy today.
At the time this article was published Fool contributor Dan Radovsky has no financial interest in any of the above-mentioned companies. The Motley Fool owns shares of China Mobile and Telefonica. Motley Fool newsletter services have recommended buying shares of China Mobile, France Telecom, and Vodafone Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.