Melita and Vodafone to merge into fully integrated provider

Vodafone-Melita merger: companies have combined €500 million enterprise value • GO plc says merger requires MCCAA clearance

Apax Partners Midmarket SAS, Fortino Capital, and Vodafone Group Plc today announced an agreement to combine Melita Ltd and Vodafone Malta.

The transaction combines Vodafone Malta, the country’s leading mobile operator with the highest customer satisfaction scores and an industry-leading 4G mobile network covering 99% of the Maltese population, with Melita, Malta’s leading cable, broadband and pay TV provider, with a network covering 99% of Maltese households. Melita offers a wide range of rich content and superfast broadband download speeds of up to 250mbps.

The combined company’s mobile and enterprise business will operate under the Vodafone brand, distribute a wide range of services including Vodafone’s global portfolio of products and services and benefit from access to Vodafone’s extensive expertise in mobile and fixed operations worldwide.

The combination will create a new fully integrated communications company with the scale and resources required to offer competitive ‘quad play’ bundled mobile, fixed broadband, fixed telephony and TV services to Maltese consumers and a full range of enterprise services for businesses and the public sector.

The company is expected to be able to generate cost synergies through the rationalisation of overlapping activities and greater network investment efficiency as the Combined Company introduces 4.5G, and subsequently 5G, mobile networks and gigabit-capable fixed networks.

At completion, the current shareholders of Melita will own 51% of the Combined Company and Vodafone Europe B.V., the current shareholder of Vodafone Malta, will own the remaining 49%.

The transaction values Vodafone Malta at an enterprise value of €208 million, while Melita is valued at an enterprise value of €298 million.

At completion, the combined company’s net debt is expected to be approximately €345 million and Vodafone will receive an estimated cash payment of €120 million which will be used for general corporate purposes. Melita’s shareholders will receive an estimated cash payment of €33 million.

Melita shareholders intend to appoint the current CEO of Melita, Harald Rösch, as CEO of the new company and Vodafone intends to appoint the current CFO of Vodafone Malta, Caroline Farrugia, as CFO of the Combined Company. Vodafone will announce a new role for Amanda Nelson, the current CEO of Vodafone Malta, in due course.

The transaction is conditional on approval from the Malta Competition and Consumer Affairs Authority and is expected to close in the second half of the 2017 calendar year.

In a statement, GO plc said that the merger will need to be assessed and require eventual clearance by the MCCAA.

“As GO has already stated following initial reports about this possible merger, the company understands the desire of other operators to consolidate their position in the Maltese market. Whilst GO is well placed to face such developments, it is naturally important that a fair competitive and regulatory environment is maintained primarily for the benefit of consumers in Malta but also for operators such as GO which continues to make very significant investments in the national telecommunications infrastructure,” the company said. 

GO said there are very clear competition rules and precedents which guide regulators in such acquisitions.

“GO is confident that the relevant authorities will follow such principles throughout this process. GO will participate fully in the consultation process to ensure that competition is safeguarded through the prevention of significant impedance of effective competition by the creation or strengthening of a dominant position. This is in line with GO’s unwavering commitment towards its shareholders, employees, customers and its consumers in Malta.”

Harald Rösch, the CEO of Melita, said: “The highly complementary combination of Vodafone Malta with Melita will enable both companies to better respond to changing customer needs and the increasing convergence between mobile and fixed networks. This transaction will generate significant benefits for consumers, enterprises and the public sector. The combined company will also have the scale to invest more quickly in developing advanced digital infrastructure for Malta.”

Vodafone Malta Chief Executive Amanda Nelson said: “We plan to create a new customer-focused integrated communications company with a culture that retains a strong commitment to delivering the highest standards of customer service. The combined company will have the full and active support of Vodafone including use of its globally-recognised brand, as well as its products and services, and access to its extensive expertise in mobile and fixed operations worldwide.”

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