Melita-Vodafone merger deal is off the table, companies announce

A proposed €500 million merger of telcos Melita and Vodafone will not go ahead after the companies say they are unable to meet competition regulator requirements

The telecommunications companies Vodafone and Melita have announced they will not proceed with a merger, after being unable to comply with competition authorities’ requirements.

The two Maltese quad-players were planning to join forces, turning the small telco market in Malta into a duopoly with GO plc.

The talks started in May 2017 when Vodafone, Apax Partners and Fortino Capital announced their intention to combined Vodafone Malta with Melita.

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The deal had to be approved by the Malta Competition and Consumer Affairs Authority, and if approved the merger could have narrowed local competition for mobile phone services down to just two companies. But Vodafone CEO Amanda Nelson had argued that “the number of operators is no longer as relevant” given the rise of services such as WhatsApp and Skype.

But talks fell through following a detailed Phase II investigation carried out by the Office for Competition (OFC) within the Malta Competition and Consumer Affairs Authority (MCCAA).

The OFC initiated this investigation in view of serious concerns on significant impediment to effective competition in the market. The takeover process, the largest market concentration in Malta’s history, was closely followed both in Malta and beyond in view of a number of objections from the industry, consumer groups and other parties.

A GO spokesperson said that the proposed takeover would potentially have resulted in a scenario that would have been bad for consumers, bad for a sustainable and viable communications industry and ultimately not ideal for Malta as a whole.

"We believe that the relevant authorities have acted professionally, prudently and with due consideration to the realities of the Maltese market throughout the complex investigation process. In any case, GO will continue to persevere with its own long term strategies, and reaffirms its commitment to offer cutting-edge and future-proof telecommunications solutions for personal and business customers."

In a statement, Melita shareholders maintained their commitment to their objective of “structuring a unique network that will place Malta ahead of all other European countries in terms of telecom infrastructure”.

They confirmed their support for an upgrade of Melita’s network, to the 4.5G standards, as well as a nationwide roll out of the recently launched Gigabit Internet service.

The merged Voda-Melita company was expected to operate under the Vodafone brand.

Vodafone Malta has been valued at €208 million and Melita at €298 million as part of the deal, with the combined company assuming net debt of approximately €345 million. 

Vodafone was to receive an estimated cash payment of €120 million while Melita’s shareholders would take an estimated cash payment of €33 million. Current Melita CEO Harald Rösch was expected to take over as CEO while current Vodafone Malta CFO Caroline Farrugia would take over the CFO spot.

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