Vodafone confirms €7.2bn Spanish cable acquisition

UK-based operator Vodafone has announced the acquisition of private equity-owned Spanish cable operator Ono for €7.2bn. Ono offers high speed broadband and pay TV services in Spain and Vodafone said that the transaction will accelerate its unified communications strategy “in a highly converged European market”.

Vodafone added that the acquisition will give it a time to market advantage when launching products and services in Spain. The operator group also intends to capitalise on Ono’s distribution and marketing capabilities and aims to cross-sell products and services to each company’s customer base. Vodafone estimates revenue synergies with a total net present value of approximately €1bn.

It added that Ono’s network reach will complement its own FTTH rollout in Spain. According to Vodafone, Ono has Spain’s largest fibre networks, with a reach of 7.2 million homes, or 41 per cent of all Spanish homes. However, its customer base  currently stands at just 1.9 million homes and Vodafone highlighted the attraction of Ono’s spare capacity.

“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,” said Vodafone Group CEO Vittorio Colao.

The acquisition has been expected for some time, with Ono delaying plans for an IPO while Vodafone prepared its offer.

José María Castellano Ríos, chairman of the Ono board of directors, said that the transaction reflects the firm’s “attractive position”.

“As part of Vodafone, Ono will continue to seize new growth opportunities and deliver the quality that our customers expect,” he said. “The enlarged business is also expected to drive innovation in the Spanish telecommunications industry.”


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According to James Allison, senior telecoms analyst at IHS, the acquisition reflects Vodafone’s increased focus on multiplay offerings. “Vodafone felt itself at a competitive disadvantage to Telefónica and Orange with their comprehensive quad play offerings – its announcement of Vodafone Box in February 2014 was an attempt to remedy this, but this acquisition significantly strengthens its position in TV and broadband,” he said.

“At the end of September 2013, Vodafone had 896,000 fixed broadband subscriptions. The acquisition of Ono would give it an additional 1.4 million broadband subscriptions and 0.8 million pay TV subscriptions.”

Allison likened the deal to Vodafone’s acquisition of German cable provider Kabel Deutschland for €7.7bn last year.

Vodafone plans to use that acquisition to offer premium unified communications services to consumer and enterprise customers in  Germany and believes that by creating an integrated communications operator it could generate around €11.5bn in revenue each year in Germany.

Allison added that the deal is symptomatic of a trend across Europe of  consolidation between mobile and pay TV operators, with operators in both segments looking to utilise their existing customer relationships to sell converged services.

Last week, French conglomerate Vivendi  announced that it would enter exclusive negotiations with investment vehicle Altice over the sale of mobile operator SFR. With the acquisition, Altice intends to create a merged company with cable operator Numericable in France.

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