Vodafone to acquire ONO for €7.2 billion

Vodafone has agreed to acquire Spain’s ONO for the equivalent of €7.2 billion, following last week’s meeting of the cable operator’s shareholders to weigh the relative attractions of the UK mobile operator’s offer and a public flotation. 

Vodafone said it expects to achieve €2 billion in cost and capital expenditure synergies from the acquisition within four years of completion. The deal values ONO at 7.5 times its 2013 EBITDA and 10.4 times operating free cash flow adjusted for cost and capex synergies.

Vodafone said it expected to achieve revenue synergies to the tune of €1 billion through the development of unified products and services as well as by cross-selling of existing product lines.

ONO’s networks passes 7.2 million homes and the company has about 1.9 million customers. Its fibre network is seen as up to date, with 500 homes per node, spare capacity within its 862MHz spectrum and a fully complete DOCSIS 3.0 upgrade.

Vodafone will now refocus its own fibre-to-the-home build out on areas not covered by the ONO network, with a plan to pass 1.5 million homes. The combination of its own and ONO’s network will pass 10 million homes, or 57% of the country’s total.

Vodafone expects the deal to close in the third quarter, pending regulatory and other approvals.

“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 CEO Vittorio Colão.

“Demand for unified communications products and services has increased significantly over the last few years in Spain, and this transaction – together with our fibre-to-the-home build programme – will accelerate our ability to offer best-in-class propositions in the Spanish market. We look forward to welcoming the management and employees of Ono to Vodafone and working together to serve our customers across Spain.”

Separately, Vodafone’s German unit has registered a domination and profit and loss transfer agreement following the completion of the takeover of Kabel Deutschland. The integration of Vodafone Germany and Kabel Deutschland will now begin from April 1.