* 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 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.