Head-Scratching Time in Telecom M&A

Whatever its shortcomings as an industry, one can always count on telecom to deliver unusual and inexplicable M&A activity. Down in Greece, ON Telecoms and Vivodi, two companies I studied in great detail once upon a time in a previous incarnation, have decided to get together, in a somewhat unusual deal.

Having presumably already burned a lot of cash on their own company, I'm puzzled as to why the vendors would pony-up for the entire capital increase required to get the deal done, especially when the Greek regulator seems to be giving incumbent OTE more room for maneuver on marketing of bundles.

Perhaps there's some trade-off in terms of footprint complementarity, but I would be amazed if that could account for the valuation implied by the deal, EUR250m, i.e., the same as Forthnet's market cap, though Forthnet has more subscribers and also a monopoly position in satellite pay-TV.

Disclosure: None