Vodafone has completed its €7.2bn (US$10bn) acquisition of Spanish cableco Ono from a consortium of investment firms which it agreed in mid-March.
The closing followed the European Commission clearing the merger without remedies at the start of the…
Vodafone has completed its €7.2bn (US$10bn) acquisition of Spanish cableco Ono from a consortium of investment firms which it agreed in mid-March.
The closing followed the European Commission clearing the merger without remedies at the start of the month.
Today the British telco said: “The transaction accelerates Vodafone’s unified communications strategy in a key, highly-converged European market, providing a significant time-to-market advantage and network reach that is complementary to Vodafone Spain’s ongoing fibre-to-the-home build programme with Orange.”
Vodafone currently offers mobile services, fixed-line telephony and ADSL broadband in the country. Meanwhile Ono’s fibre-optic network covers 13 of Spain’s 17 regions, passes 7.2 million homes, and boasts 1.9 million subscribers.
Now that the deal has closed, Vodafone has updated its fibre sharing contract with Orange. Instead of jointly building fibre to three million homes as previously planned, that number has been cut to two million homes. Vodafone will now provide Orange with wholesale access on commercial terms to one million homes through Ono’s network. This amendment prevents the build-out programme from overlapping with Ono’s network.
Vodafone said the acquisition valued the triple-play operator at 7.5x 2013 EBITDA and 10.4x 2013 operating free cash flow, adjusted for cost and capex synergies.
Ono reported €1.6bn in revenue for 2013 and €680m in EBITDA. It was 54.4%-owned by investment firms Providence Equity Partners, Thomas H. Lee, CCMP and Quadrangle, which put €1bn in the company in 2005. The rest of its stock was held by other institutional investors. The owners had been pursuing a dual-track process but eventually plumped for Vodafone’s offer.
Vodafone was advised by Morgan Stanley and its board also received advice from Robertson Robey Associates. Deutsche Bank has been Ono’s lead adviser.
It is its first takeover since it closed the US$130bn sale of its 45% stake in Verizon Wireless. Vodafone financed the Ono purchase using its cash resources and existing bank facilities.
The deal is Vodafone’s latest move in its new converged strategy that it has been pursuing in Europe. It has been looking to acquire operators which enable it to provide broadband, fixed-line telephony and pay-TV alongside its traditional mobile offering.
This began last year with the acquisition of Kabel Deutschland (KDG), when it paid €7.7bn for 76% of the operator.
Vodafone is now pursuing Greek fixed-line operator Forthnet and has made a joint bid for the alternative operator with local telco Wind Hellas.
Should it wish to expand in Spain it may look to the three small cablecos in northern Spain. Prior to its takeover, Ono was assessing R Cable, held by CVC, Carlyle’s Telecable, and Euskaltel, whose owners include PE firms Investindustrial and Trilantic Capital.
