Ono...Oh no, get it? Ok, no more puns I promise. But Vodafone has kicked off the week with an expected spending spree down in Spain. Sources around the globe are saying that the UK-based operator has in fact succeeded in its not-so-secret bid to purchase the Spanish cable operator Ono for €7.2b (about $10B). [update: it's official, here's the press release]
Since striking its deal with Verizon for its stake in Verizon Wireless for a mind-boggling $130B, Vodafone has been shopping for ways to put that money to work. Clearly they have decided that matching their wireless footprint with cable broadband assets is the way to go, as this follows their Kabel Deutschland buy last year. The specifics of how they will really make this strategy work for them are not yet clear, but will hopefully become clearer as 2014 unfolds.
As for Ono itself, Vodafone has €240M in annual cost and capex synergies on the drawing board over the next four years as they integrate the business with Vodafone Spain. They also expect a present value of $1B in revenue synergies, always a brave number to try to predict. That puts the post-synergy multiple at 7.2xEBITDA according to Vodafone. Vodafone's own FTTH efforts in Spain will be refocused to places where ONO doesn't go, hopefully giving them some 10M households passed when all is said and done.
Ono had been prepping for an IPO, but for its private equity backers this is much cleaner. And if there are other similar assets like this elsewhere in Europe, you can bet the owners know exactly what this deal's valuation means for their own. There's no reason to think Vodafone wouldn't be ready to go for the hat trick. There's still plenty of cash left...
I still think that at some point Vodafone may take a look at a pan-European network operator to give its assets a deeper fiber grounding and a better shot at the enterprise market though. For now, that rumor of an AT&T bid for Vodafone itself remains dead until perhaps summer, despite recent efforts to revive it.
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