Vodafone agrees deal to buy Ono for over EUR 7 bln - report

The shareholders of Spanish cable operator Ono have approved plans for an initial public offering as some Spanish press sources, including business daily Expansion and online newspaper El Confidencial, report that Vodafone has had a bid of around EUR 7.2 billion accepted by the Spanish company. The increased offer, which includes Ono’s net debt of around EUR 3.3 billion, is Vodafone’s third bid for the operator, which continued working on alternative plans for a flotation after rebuffing previous offers of EUR 6 billion and EUR 6.5 billion. The new bid is around 10 times Ono’s EBITDA for 2012 of EUR 752 million and is said to have convinced Ono’s key shareholders including Providence Equity Partners, Thomas H. Lee Partners, CCMP Capital Advisors LLC and Quadrangle Capital Partners, which hold about 54.4 percent of the operator. Neither party has made any official announcements regarding the takeover which, according to Expansion, could be finalised by 17 March after the full equity value of the deal, as well as compensation for antitrust issues and the cost of upgrading customers or networks, are agreed upon.

If the deal is completed, Ono will abandon its stock market listing, which would have valued the company at around EUR 7 billion. Vodafone will in turn acquire Ono’s extensive fibre network, which covered around 7.2 million households at the end of 2013, giving Vodafone the opportunity to expand into high-margin data services and come up with convergent packages to compete with Movistar's dominant Fusion offering. Ono also has around 1.7 million residential cable customers, 1.35 million internet customers and over 1 million mobile customers.

Questions regarding Vodafone’s partnership with Orange Spain to jointly invest in fibre deployment to cover 6 million households by 2017 and Ono’s agreement with Telefonica to offer mobile services over the Movistar network remain unanswered for the time being. The deal would also be subject to regulator approval, which could take several months even though the combined market share of the two operators in the fixed broadband and mobile sectors should not pose a problem.