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
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
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

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Loren Hughes: Financial Accountant

£45,000 - £55,000: Loren Hughes: Are you looking for a new opportunity that wi...

Sheridan Maine: Finance Analyst

Circa £45,000-£50,000 + benefits: Sheridan Maine: Are you a newly qualified ac...

Sheridan Maine: Financial Accountant

£150 - £190 Daily Rate: Sheridan Maine: One of London's leading water supplier...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor