FTSE100

Vodafone snaps up Spain's Ono

Vodafone shares top FTSE100 index after telecom giant snaps up Spanish cable TV and internet services operator Ono for EUR7.2billion. The deal comes six months after Vodafone snapped up Germany’s Kabel Deutschland – a deal welcomed by the Vodafone shareholders as the telecom giant diversified its European portfolio in an expansion drive.

 

Having the framework for cable post Kabel deal puts Vodafone in a good position with other cable/internet services companies around the world, particularly in Europe – an area that Vodafone is growing its presence in. Vodafone’s southern European businesses were struggling at the tail end of 2012 and most of 2013 so this deal should help the group’s operations in that area.

 

That together with growing confidence in the Spanish market with better economic fundamentals as the country moves out of crisis zone and on a path to growth raises the investment outlook for Vodafone’s Spanish business. Also, remember that Vodafone has tons of cash on its books after the sale of its Verizon Wireless stake - £25billion of the £84billion from the Verizon Wireless disposal has been allocated for the group’s acquisition drive - £6billion for Ono is a decent price-tag, one that shareholders are unlikely to protest at.

 

Breaking the deal down – Vodafone sees synergies of around EUR2B with the transaction set to be earning accretive in the first year after completion. Ono has 1.9 million customers – this will help bridge a gap  in the Vodafone’s existing telecoms business in Spain. All in all, very welcome news for Vodafone – expecting similar cable/internet services deals by Vodafone in forthcoming years.