Telecom giant Vodafone agreed to buy Spanish cable company Ono for €7.2 billion ($10 billion) in a bid to grow the scope and volume of its European operations. The acquisition comes two months after the British company announced it would allocate €29 billion of cash from the sale of its stake in US mobile operator, Verizon Wireless, for European telecom investments.
Madrid-based Ono is a cable and broadband operator that provides internet connection and cable TV services to almost 1.9 customers and 7.2 million homes across the country. Through the acquisition of Ono, Vodafone will strengthen its position with expanded and diversified telecom services, faster internet and a better position from which to compete with local giant Telefonica
Vodafone is expected to pay for the acquisition through a combination cash and debt. The regulatory procedures and approval for the transfer of Ono, currently owned by a private-equity firm and the second largest communications company in the country, are expected to be finalised in Q3 2014. The Spanish company is said to have reluctantly postponed its planned IPO on Madrid stock exchange as a result of the sale.
The press release by Vodafone says that Ono has the largest next-generation network in Spain, serving customers in 13 of Spain’s 17 regions. It is the market leader in high speed broadband and has a future-proof fibre architecture.
“Demand for unified communication products and services has increased significantly over the last few years in Spain and this transaction – together with our fiber-to-the-home build program – will accelerate our ability to offer best-in-class propositions in the Spanish market,” said Vittorio Colao, the Vodafone group chief executive.
Though its revenues declined in the last couple of years, Ono is in pretty good shape, generating €686 million in revenue while reducing total debts to €3.3 billion as of the end of 2013. It has approximately 1.5 million broadband and 1 million mobile telephone clients. Either bundled together or offered separately; it delivers fiber-optic services to about 7.2 million homes.
“As part of Vodafone, Ono will continue to seize new growth opportunities and deliver the quality that our customers expect,” said José María Castellano Ríos, Ono’s chairman, in a statement.