Advanced Television

€7.2bn Vodafone/ONO deal confirmed

March 17, 2014

From David Del Valle in Madrid and Colin Mann in London

VodafoneVodafone has agreed to acquire 100 per cent of the share capital of ONO for a total consideration equivalent to €7.2 billion on a debt and cash free basis. Final completion of the transaction is subject to the approval of the relevant competition authorities.

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 FTTH build programme.

Vodafone expects to achieve cost and capex synergies with a run-rate of approximately €240 million (£200 million) before integration costs by the fourth full year post completion, equivalent to a net present value of approximately €2.0 billion  after integration costs.

Vodafone sees a significant opportunity to accelerate growth in unified communications products and services by leveraging its extensive distribution and marketing capabilities and through cross-selling to each company’s customer base. Vodafone estimates revenue synergies with a total net present value of approximately €1.0 billion. The Transaction values Ono at a multiple of 7.5x 2013 EBITDA and 10.4x 2013 OpFCF, adjusted for cost and capex synergies.

Vodafone Group Chief Executive Vittorio Colao said the combination of Vodafone and ONO created a leading integrated communications provider in Spain and represented an attractive value creation opportunity for Vodafone. “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.”

The Chairman of the ONO Board of Directors José María Castellano Ríos said: “This transaction reflects ONO’s attractive position as Spain’s leading provider of high speed broadband, premium pay-TV and fixed communications. As part of Vodafone, ONO will continue to seize new growth opportunities and deliver the quality that our customers expect. The enlarged business is also expected to drive innovation in the Spanish telecommunications industry.”

The Transaction enables Vodafone to take advantage of the rapid increase in the adoption of unified communications products and services in the Spanish market and provides Vodafone with immediate access to 7.2 million homes at a significant time-to-market advantage. ONO’s network is complementary to Vodafone’s fibre-to- the-home (“FTTH”) build programme which will be refocused towards areas where ONO has limited or no network presence. Vodafone intends to complete its FTTH rollout to 1.5 million homes passed, providing it with access to a NGN network covering up to 10 million homes released to marketing, equivalent to 57 per cent of total Spanish homes.

In-market consolidation with substantial cost and capex savings

The Transaction is expected to generate significant cost and capex savings with an annual run-rate of approximately €240 million, before integration costs, in the fourth full year post completion, equivalent to a net present value of €2.0 billion after integration costs. The savings will be primarily derived from utilising ONO’s network for mobile backhaul, limiting Vodafone’s FTTH build plan to the initial 1.5 million homes passed, the rationalisation of overlapping activities and the migration of ONO’s mobile traffic to Vodafone’s network.

Significant potential to accelerate growth in Spain

Vodafone will be able to leverage its extensive distribution network to increase the penetration of ONO’s homes released to marketing, which is currently lower than any other major European cable operator. There is also a significant opportunity to cross-sell ONO’s high quality broadband, fixed telephony and pay-TV offerings to Vodafone’s existing customers. Vodafone also expects to be able to cross-sell its mobile services to Ono’s customers and offer new services, using both companies’ product sets and networks. Vodafone estimates revenue synergies with a total net present value of approximately €1.0 billion after integration costs.

Significantly value-accretive transaction

The Transaction values Ono at a multiple of 7.5x 2013 EBITDA and 10.4x 2013 OpFCF adjusted for cost and capex synergies. The Transaction comfortably meets Vodafone’s M&A criteria and is expected to be accretive to Vodafone’s adjusted EPS and FCF per share after cost and capex and before integration costs from the first full year post completion.

Ono management and employees

Vodafone values the expertise of ONO’s management team and employees and will work closely with them to support the integration with Vodafone. As in similar recent transactions, Vodafone would expect ONO’s management to become an integral part of the local management team, focused on the broadband, fixed telephony and pay-TV segments of the combined business. ONO’s employees will also benefit from a broader range of international career opportunities available across the Vodafone Group.


Vodafone will finance the Transaction from its existing cash resources and committed but undrawn bank facilities.

Reports emerged Friday March 14 that an agreement had been reached which would see the telco acquire the cable group for €7.2 billion

The deal comes soon after ONO’s shareholders had given their approval to an IPO of the company, which now will be dropped.
The new Vodafone will have a share of 21 per cent in the broadband market, with around 2.4 million users and 26 per cent in mobile with 13.5 million mobile users. The agreement with ONO will allow Vodafone to break into the Spanish TV market once more with around 900,000 pay-TV subscribers from the cable company.

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