A pedestrian uses a mobile device as balloons sit beneath a sign outside a Vodafone store, operated by Vodafone Group Plc, in Hamburg, Germany, on Saturday, November 9 2013

Vodafone has agreed to buy the majority of Hellas Online, a Greek broadband provider, for €72.7m to bolster its internet services in the country.

The British telecoms group has offered to acquire 72.7 per cent of Hellas Online, in which it already owns 18.5 per cent, from electronics group Intracom and World Equities Investments. Vodafone will offer to buy the remainder of the company once the deal has completed.

The deal will further Vodafone’s strategy to offer fixed line and internet services alongside its traditional mobile telecoms network, which allows it to sell “bundled” deals to consumers.

Vodafone said the deal would create “a leading integrated telecom operator in Greece with the number two market position by revenues in both fixed-line and mobile communications”.

The acquisition will give the company an enterprise value of €311m, including adjusted net debt of €211m, and reflects a multiple of 4.5 times last year’s earnings. Bank of America Merrill Lynch is acting as financial adviser to Vodafone.

Hellas Online has about 519,000 customers, representing a market share of approximately 11 per cent. Vodafone Greece and Hellas Online have been working together since 2009 when Vodafone took its initial 18.5 stake.

For the 12 months ended December 31, Hellas Online reported revenues of €227.4m, earnings of €68.4m and capital expenditure of €36.7m.

Vodafone predicted cost and capital expenditure synergies would rise to about €24m on an annual basis before integration costs within three years of the deal completing, equivalent to a net present value of about €135m after integration costs.

The synergies would be made in sharing network and IT infrastructure, Vodafone said, as well as saving on marketing and bill collections. It will finance the transaction from its existing cash resources and undrawn bank facilities.

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