* Deal is 3rd buy of European fixed-broadband asset in 2 yrs
* Allows Vodafone to offer combination of services in Spain
* Vodafone targets around 240 mln euros savings in 4 yrs
* Price is multiple of 10.4x Ono's operating free cash flow
By Kate Holton
LONDON, March 17 (Reuters) - Vodafone Group Plc has agreed to buy Spain's largest cable operator Ono for 7.2 billion euros ($10 billion), in the latest move by the British group to rebuild its European operations with a broadband offering.
Vodafone said on Monday the deal would enable it to offer a combination of mobile and fixed-line telephony, pay-TV and broadband in one of its largest European markets, hit hard by fierce competition and the effects of a lengthy recession.
The deal for private equity-owned Ono is Vodafone's third purchase of a European fixed-broadband asset in two years, allowing it to offer an increasing range of services and offload some of its mobile traffic on to Ono's cable network.
The British group, which is rebuilding its core European networks with proceeds from the $130 billion sale of its U.S. arm, said it would also save around 240 million euros, before integration costs, by the fourth full year after completion.
"The combination of Vodafone and Ono creates a leading integrated communications provider in Spain and represents an attractive value-creation opportunity for Vodafone," the latter's Chief Executive Vittorio Colao said.
A 7.2 billion euro price tag implies a multiple of 10.4 times the target's operating free cash flow, broadly in line with recent deals in the European cable and telecoms sector.
Ono, which had been in the process of preparing for a stock market flotation, has 1.9 million customers on its network that covers 70 percent of Spain, or 7.2 million households out of a total of 16 million.
Having built the network later than other cable and telecom companies, it can achieve broadband speeds of up to 200 megabits per second, or up to 20 times the average of rival networks.
The deal for Ono, which is mostly present in more rural parts of Spain, also complements the cable network Vodafone has begun building with Orange SA in major Spanish cities.
Ono is 54 percent owned by investment funds Providence Equity Partners, Thomas H. Lee Partners, CCMP Capital Advisors and Quadrangle Capital.