Vodafone’s €7bn swoop for Ono to trigger new wave of takeovers

Deal marks Vodafone's third purchase of a European fixed-broadband asset in two years

City analysts are forecasting that Vodafone’s €7.2bn (£6bn) takeover of Spanish broadband and pay-TV firm Ono will trigger a wave of merger and acquisition activity across Europe.

Vodafone’s swoop for Ono is part of its strategy of diversifying beyond mobile as phone revenues hit a plateau and customers increasingly look to one telecoms supplier for mobile, broadband, home phone and pay-TV, dubbed a “quad play”.

Most analysts welcomed Vodafone’s long-anticipated Ono deal as they said it strengthened the British company’s position and heaped pressure on Telefonica, the Spanish owner of O2, and Orange, the French joint owner of Britain’s EE, to do similar deals.

“It’s the start of a whole new set of M&A stories, pan-European,” declared Robin Bienenstock of Sanford C Bernstein bank. “You start to see cross-border stuff.”

Vodafone’s chief executive, Vittorio Colao, said the FTSE 100 giant has already been changing radically as it has expanded beyond its core mobile business. “Vodafone is becoming a very different company to the company it was two years ago,” he said. “We are more a unified communications provider, not just a mobile one.”

The Ono deal follows Mr Colao’s €7.7bn purchase of the German cable and pay-TV firm Kabel Deutschland last year and the £1bn takeover of the British fixed-line broadband company Cable & Wireless Worldwide in 2012.

Other telecoms firms have also been consolidating in Europe as broadband and TV converge. The US giant Liberty Global has bought Britain’s Virgin Media and Holland’s Ziggo, and AT&T is also on the prowl, though it has ruled out a bid for Vodafone for at least six months.

Mr Colao said Vodafone was willing to invest organically as well as to acquire businesses, noting that he is building fibre networks in Portugal and Italy as part of Vodafone’s expansion into broadband and TV.

Espirito Santo bank said Vodafone could be “planning to make acquisitions in Europe, including the UK” after the Ono deal, but Mr Colao played down an imminent UK takeover move. The next chapter in Vodafone’s history is “not just an M&A chapter”, insisted Mr Colao, who has money for acquisitions after Vodafone’s bumper sale of Verizon Wireless.

He pointed out that 50 per cent of Vodafone’s British business is focused on enterprise – servicing business customers – unlike in the rest of Europe, where enterprise business makes up only 30 per cent of the total.

Vodafone has no need to start offering a quad play in the UK, Mr Colao said, even though he is doing so in Germany, Spain and Portugal. He also ruled out a bid for either ITV or Channel 5.

Analysts suggest Mr Colao could strike a deeper partnership with BSkyB, which already has a deal to let Vodafone customers access Sky Sports’ mobile clips. Some say he could also mount a bid for the telecoms provider TalkTalk, although analysts at Bernstein dismissed that idea as it has “almost none of the ‘rationale and synergy’ boxes that Ono ticked in Spain”.

Vodafone gains 1.9 million customers from Ono and reckons it can sell more services as Spain’s biggest cable firm has a network that already “passes by” 7 million homes.

Start your day with The Independent, sign up for daily news emails
News
A poster by Durham Constabulary
news
Life and Style
Steve Shaw shows Kate how to get wet behind the ears and how to align her neck
healthSteven Shaw - the 'Buddha of Breaststroke' - applies Alexander Technique to the watery sport
Sport
Cameron Jerome
footballCanaries beat Boro to gain promotion to the Premier League
Arts and Entertainment
Performers drink tea at the Glastonbury festival in 2010
music
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine