Vodafone Acquires Spanish Cable Operator Ono for $10.3 Billion

7:19 AM PST 03/17/2014 by Pamela Rolfe

The deal is the U.K. telecom giant's third acquisition of a pay TV and broadband company in Europe in two years, following similar moves in Britain and Germany.

MADRID -- U.K. telecom giant Vodafone said Monday it has acquired Spain's leading cable operator, Ono, for $10.3 billion (€7.2 billion).

Ono, which serves approximately 7.2 million homes, is the Spanish market leader in broadband, offering high speeds and innovative pay TV services.

The deal for privately owned Ono is Vodafone's third acquisition of a European pay TV and broadband asset in two years. It recently outbid John Malone's Liberty Global for German cable operator Kabel Deutschland. This will allow it to offer an increasing range of services and hand over some of its mobile traffic to Ono's cable network.

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Vodafone said it expects to achieve cost and capital expenditure synergies with a run-rate of approximately $333 million (€240 million) before integration costs by the fourth full year after completion, equivalent to approximately €2.0 billion (£1.7 billion) after integration costs. The company said it also estimates revenue synergies with a total net present value of approximately €1.0 billion ($1.4 billion).

The move highlights Vodafone's plan to accelerate growth in unified communications products and services by leveraging its distribution and marketing capabilities and through cross-selling services.

The $10.3 billion price tag is about 10.4 times Ono's operating free cash flow, which experts say is in line with recent deals in the European cable and telecoms sector.

"The combination of Vodafone and Ono creates a leading integrated communications provider in Spain and represents an attractive value creation opportunity for Vodafone," said Vodafone Group CEO 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 fiber-to-the-home build program -- will accelerate our ability to offer best-in-class propositions in the Spanish market."

"This transaction reflects Ono's attractive position as Spain's leading provider of high speed broadband, premium pay TV and fixed communications," said Ono chairman Jose Maria Castellano Rios. "As part of Vodafone, Ono will continue to seize new growth opportunities and deliver the quality that our customers expect."

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