Vodafone buys cable operator Ono in Spain

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Amy Thomson and Manuel Baigorri London and Madrid

Vodafone Group, the second-largest cellular carrier, has agreed to buy Spanish cable operator Grupo Corporativo Ono in a e7.2 billion (R106.9bn) transaction to boost television and broadband offerings.

The purchase gives Vodafone 1.9 million customers in Spain, complementing its cellular service and helping it challenge Telefonica and Orange.

The deal would generate savings of about e2bn and potential revenue addition of e1bn, Vodafone said yesterday.

Vodafone, which bought Germany’s Kabel Deutschland last year, is adding internet and television services across Europe as it looks for ways to compensate for falling cellular revenue. The deal might spur more takeovers as rivals tried to match Vodafone’s size, Robin Bienenstock of Sanford C Bernstein said.

“It’s the start of a whole new set of merger and acquisition stories, pan-European,” the analyst said. “You start to see cross-border stuff.”

Vodafone shares rose as much as 1.82 percent by 1.30pm in London. The stock has lost 1 percent in the past year.

Vodafone will finance the deal, which pre-empts a planned initial public offering approved by Ono’s investors last week, with cash and undrawn bank facilities. The e7.2bn valuation includes e3.3bn of debt.

Ono shareholders include private equity firms Providence Equity Partners, CCMP Capital Advisors, Quadrangle Capital Partners and Thomas H Lee Partners. The four together hold about 54.4 percent of the Spanish operator.

Europe’s communications market is consolidating as Vodafone and rivals such as billionaire John Malone’s Liberty Global vie for assets. Liberty agreed to take full control of Dutch broadband provider Ziggo for $6.7bn in January, and last week French cable carrier Numericable won a bid to combine with Vivendi’s SFR wireless unit.

At the same time, AT&T remains interested in buying Vodafone even after giving up the option to bid for the carrier for six months, people familiar with the situation said in January.

AT&T has expressed interest in Europe’s move into fourth-generation wireless networks, which are a few years behind services in the US and present the opportunity for carriers to charge a premium.

“Vodafone has its own stand-alone strategy,” chief executive Vittorio Colao said yesterday. – Bloomberg


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