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Europe approves Vodafone-ONO deal

ONOThe European Commission has cleared Vodafone’s planned €7.2 billion takeover of Spanish cable operator ONO under EU merger regulations.

The Commission said that the deal would not raise competition concerns as the two businesses would largely complement each other – with ONO mainly focused on fixed telecoms while Vodafone is most active in mobile.

“Vodafone and ONO’s activities overlap in a number of markets in the fixed and mobile telecommunications markets in Spain. However, the Commission found that the impact of the transaction on these markets is likely to be limited as the combined entity would continue to face significant competition from other market players, such as the incumbent operator Telefónica, and other operators such as Orange and Jazztel,” said the Commission.

It added that the deal would produce a number of “vertical and conglomerate relationships” in the fixed and mobile teleco markets in Spain, in particular bundled multiplay services.

However, it said that the availability of alternative operators would mean that competition in this area from fixed or mobile service providers would not be stifled.

Vodafone agreed to acquire Spain’s ONO in March for the equivalent of €7.2 billion. The firm said it expects to achieve €2 billion in cost and capital expenditure synergies from the acquisition within four years of completion. The deal values ONO at 7.5 times its 2013 EBITDA and 10.4 times operating free cash flow adjusted for cost and capex synergies.