Vodafone to buy Spain's largest cable operator ONO for €7.2 bn
18 March 2014
Vodafone Group Plc yesterday struck a deal to buy Spain's largest cable operator Grupo Corporativo ONO SA, for €7.2 billion ($10.03 billion) including debt, the latest move by Europe's largest telecom firm to expand its European operations.
The deal comes just six months after Vodafone acquired German cable operator Kabel for $10 billion including debt. (See: Kabel Deutschland investors approve Vodafone's $10-bn buyout offer)
The acquisition also comes a month after the British mobile phone operator completed a $130-billion sale of its stake in US mobile network Verizon Wireless.
Madrid-based ONO is owned by private equity firms Providence Equity Partners, Thomas H. Lee Partners, Quadrangle Capital Partners and JPMorgan Partners.
ONO provides fixed line telephones, broadband and pay TV, and mobile telecom services.
ONO has the largest next-generation network in Spain with approximately 7.2 million homes in 13 of Spain's 17 regions or 41 per cent of total homes in Spain.
ONO, which has invested around €7 billion in its network since 1998, is the market leader in high speed broadband, offering broadband speeds in excess of 200 Mbps, and pay-TV service in Spain through TiVo.
Vodafone expects to achieve cost savings of around €240 million before integration costs by the fourth full-year after completion of the deal.
The company's revenue rose 1.6 per cent in 2013 to €1.6 billion from €1.57 billion in 2012, but swung to a net loss of €25 million from a net profit of €52 million the year before.
Vittorio Colao, CEO of Vodafone, said, "The combination of Vodafone and ONO creates a leading integrated communications provider in Spain and represents an attractive value creation opportunity for Vodafone.''
"Demand for unified communications products and services has increased significantly over the last few years in Spain, and this transaction – together with our fibre-to-the-home build programme – will accelerate our ability to offer best-in-class propositions in the Spanish market," he added.
José María Castellano Ríos, chairman of ONO, said, "As part of Vodafone, ONO will continue to seize new growth opportunities and deliver the quality that our customers expect. The enlarged business is also expected to drive innovation in the Spanish telecommunications industry."