Vodafone closes in on £340m deal for Spanish internet player

Vodafone is closing in on a deal to buy Spain's fourth-largest internet company, Ya.com, for around £340m as it continues to invest in providing communications services to complement its mobile phone business.

Ya.com is owned by Deutsche Telekom, the owner of T-Mobile, a rival to Vodafone in the mobile sector. Deutsche Telekom bought the Spanish company in 2000 for €550m but put it up for sale this year. Vodafone has seen off competition for the business from the likes of France Telecom, the owner of Orange, Telecom Italia and Jazztel.

Ya.com has 450,000 users, making it Spain's fourth-largest internet service provider behind Telefonica, the owner of O2, France Telecom's Orange and the cable company Ono. Ya.com was created by Martin Varsavsky, a telecommunications and new media entrepreneur, in 1999. The 47-year-old, who was born in Buenos Aires, moved to Madrid in the 1990s from the US and has founded six other new media companies.

The acquisition would come hot on the heels of Vodafone's hard-fought deal to buy the Indian operator Hutchison Essar, an acquisition it completed last week. Arun Sarin, Vodafone's chief executive, has detailed a strategy to invest in emerging markets such as India and in new growth areas like mobile advertising.

One growth area in mature markets is the advent of "converged" telecoms services where customers source various communications products through the same provider. To compete with the likes of Virgin Media, which offers customers TV, mobile and fixed-line phone services and broadband as part of one package, Vodafone has looked to increase the number of services it offers alongside mobile phones. In the UK, it has struck a deal with BT to use the fixed-line company's network to offer broadband to Vodafone customers, while in Germany it has used its own Arcor network.

Vodafone has tried to sell Arcor since it acquired the fixed-line company as part of the £112bn deal to buy Germany's Mannesmann in 2000, but its new focus on converged telecoms has seen it shelve plans to dispose of the unit.

The deal to buy Ya.com represents the British company's first direct investment in fixed-line telecoms infrastructure, but it is unlikely to herald a series of deals to acquire local internet players in markets where it offers mobile phone services.

Mr Sarin has said previously that Vodafone expects to remain "infrastructure-light" in terms of internet infrastructure but would selectively consider acquisitions in markets where it makes sense in terms of speed to market.