Bloomberg: Vodafone Seeks To Buy Spain's Grupo Corporativo ONO

(RTTNews) - British telecom giant Vodafone Group plc (VOD, VOD.L) is seeking to acquire Spanish cable operator Grupo Corporativo ONO S.A. as that company prepares for an initial public offering, Bloomberg reported Sunday, citing two people familiar with the talks. A deal may be announced in the next few weeks.

According to the Bloomberg report, the acquisition of ONO would be part of Vodafone's expansion into services such as high-speed Internet and television across Europe. The company is boosting spending on upgrading its network and making acquisitions.

Vodafone said in December 2013 that it expects to complete the sale of its 45 percent stake in the Verizon Wireless joint venture to U.S. telecom giant Verizon Communications, Inc. (VZ) by February 21, 2014.

The $130 billion deal, which ends a 14-year partnership and marks Vodafone's exit from the U.S. mobile market, would be the second biggest all-time corporate deal behind Vodafone's $172 billion acquisition of Mannesmann AG in 2000.

ONO is a provider of fixed telecommunications in Spain, including fixed telephony, broadband and pay TV, as well as a provider of mobile telecom services. ONO is the only fiber operator with national coverage in Spain that provides services to both homes and businesses.

As at December 31, 2012, ONO offered more than 4.7 million fixed and mobile services to 1.8 million residential customers as well as 105,000 small and medium enterprises through its fiber optic digital high capacity, providing access direct access to more than 7 million households in most of Spain.

In 2012, ONO generated revenues of 1.57 billion euros and net profit of 52 million euros. The company has faced increasing price competition from rivals like Telefonica SA (TEF, TDE.L) and Jazztel plc.

But a potential acquisition by Vodafone may disrupt ONO's planned initial public offering that could reportedly value the company at about 6.4 billion euros or $8.7 billion, including debt.

The Spanish company held talks with investment banks in December about selling shares, Bloomberg reported. ONO's major shareholders include Thomas Lee Partners, Providence Equity Partners Inc. and CCMP Capital LLC, with a combined stake of more than 45 percent.

VOD closed Friday's trading at $38.04, down $1.05 or 2.69 percent on a volume of 11.40 million shares.