Vodafone Agrees £6bn Deal For Spanish Cable Firm Ono

Vodafone is to acquire Spanish cable firm Ono for £6 billion in cash as the British operator looks to use some of the cash generated by the £78.3 billion sale of its 45 percent stake in Verizon Wireless by boosting its fixed line business in Europe amid sliding mobile revenues on the continent.

Ono’s ‘next generation’ network reaches 7.2 million homes in 300 municipalities in Spain, including the nine biggest cities, and it has 1.9 million customers in the country.

The network is capable of offering speeds in excess of 200Mbps and Vodafone says the network is future proof with an abundance of spare capacity. Ono’s network will also be used for Vodafone’s mobile backhaul.

Vodafone Ono takeover

Vodafone has been busy constructing its own fibre-to-the-home (FTTH) network in Spain, which has now reached 1.5 homes. The FTTH network will run alongside Ono’s network, with the combined service eventually reaching 10 million homes.

“The combination of Vodafone and Ono creates a leading integrated communications provider in Spain and represents an attractive value creation opportunity for Vodafone,” says Vodafone Group chief executive Vittorio Colao. “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.

“We look forward to welcoming the management and employees of Ono to Vodafone and working together to serve our customers across Spain.”

Quad -play play

The acquisition of Ono will strengthen Vodafone’s ability to offer ‘quad-play’ packages of broadband, mobile, telephone and television services to its customers in Spain, which such bundles proving popular on the continent.

Vodafone has been investing heavily in fixed line networks in a number of European countries as it seeks to offset falling mobile revenues, and is constructing fibre networks in Italy and Ireland in addition to the one in Spain. It is also in the process of purchasing Germany’s largest cable operator Kabel Deutschland.

“The Ono deal is key to Vodafone’s turnaround strategy in southern Europe,” comments Jason Sumner, technology analyst at The Economist Intelligence Unit. “Spain has been the source of losses for several quarters, and bundling Vodafone’s mobile services with popular broadband and cable TV offerings is the only realistic choice to drive up customer retention, new subscribers and per-customer revenues.

“Vodafone signalled earlier this year that it would be using the windfall from the Verizon divestment to seek M&A opportunities and it is following through on that promise.”

More acquisitions could be on the way after Colao suggested that Vodafone has the capacity to spend between £18 billion and £24 billion on takeovers in the next few years, with no target out of reach.

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