Vodafone to buy Spain's Ono in 7.2bn euro deal

CMC Markets' senior analyst Michael Hewson: "If Vodafone is to survive... it really needs to take on fixed line infrastructure"

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Vodafone has agreed to buy Spanish cable operator Ono for 7.2bn euros ($10bn; £6bn), in deal aimed at expanding its interests in Europe.

Ono, which is private equity-owned, offers cable TV and internet services and has 1.9 million customers in Spain.

Vodafone boss Vittorio Colao said the deal was "an attractive value creation opportunity".

The deal comes just six months after Vodafone bought a controlling stake in German cable operator Kabel.

Vodafone has said it plans to spend up to £25bn of the £84bn it generated from the sale of its stake in Verizon Wireless on investment in its core European networks.

Before the Vodafone deal, Ono's private equity owners had been planning to float the company on the Madrid stock exchange.

Jose Maria Castellano Rios, chairman of Ono's board of directors, said the enlarged business would help to "drive innovation in the Spanish telecommunications industry".

Peregrine & Black analyst Markus Huber said the deal would put Vodafone in a better position to compete with rivals such as Telefonica and Orange.

"It follows the strategy they are already pursuing in Germany and in Europe in general, which is to expand their overall offer to their clients by adding cable service to their wireless services," he added.

Mike McCudden, head of derivatives at online broker Interactive Investor, agreed the purchase was a "shrewd strategic move" for Vodafone, noting that the deal would provide it with the fixed-line operation it currently lacked in Spain.

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