Spanish telco operator Grupo Corporativo Ono SA (ONO) agrees to sell to Vodafone for 7.2 billion euros. The transaction price includes debts. The Transaction values Ono at a multiple of 7.5x 2013 EBITDA adjusted for cost and capex synergies says Vodafone in a press release.
It seems that Vodafone will finance this with cash and some undrawn bank facilities.
“The combination of Vodafone and Ono creates a leading integrated communications provider in Spain and represents an attractive value creation opportunity for Vodafone,” Chief Executive Vittorio Colao (Vodafone)
This deal could generate other M&A activity in Spain as Orange is trying to do some acquisitions as well. Orange showed interest by having discussions with some investment banks for possible targets.
Main benefits for Vodafone
- Ono covers 7.2 million homes released to marketing which represent around 41% of Spain, and it provides 200 Mbps speeds to its customers as the network has been fully upgraded to DOCSIS 3.0
- Ono’s network is complementary to Vodafone’s fibre-to- the-home (“FTTH”) build programme. 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% of total Spanish homes. will
- The Transaction is expected to generate significant cost and capex savings with an annual run-rate of approximately €240 million (£200 million), before integration costs, in the fourth full year post completion, equivalent to a net present value of €2.0 billion (£1.7 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.
- 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 (£0.8 billion) after integration costs.
The deal must be signed off by regulators, although the companies don’t anticipate antitrust concerns to be an obstacle, a person familiar with the matter said.
Morgan Stanley advised Vodafone, and Robertson Robey Associates LLP assisted its board.
