Mar 17 - Vodafone Group Plc has agreed to buy Spain's largest cable operator Ono for 7.2 billion euros ($10 billion). As Hayley Platt reports it's the latest move by the British group to rebuild its European operations with a broadband offering.
It's Vodafone's third big European purchase in two years. This time Spain's largest cable operator Ono is on the shopping list. The 7.2 billion euro deal is part of a plan to rebuild its European operations and offer a broader range of services. Six months ago it bought a controlling stake in Germany's Kabel Deutschland. IG's Chris Beauchamp says it's a smart move. SOUNDBITE: Christopher Beauchamp, market analyst, IG, saying (English): "It's an important shift for the company because people are moving away from traditional calls and texting to using apps and other data services. So it's a way of capturing that data and if you capture the data you know what people's habits are and that means it gives you greater opportunity to take advantage of it in that way." Vodafone has already begun building network coverage in Spain through its partnership with Orange. The deal with Ono - which has almost 2 million customers and 70 percent of Spain's network coverage - will help it reach more rural areas. It's also expected to make savings of around 2 billion euros. The news pushed shares up 1 percent. But some are concerned the British group maybe getting too big. Chris Hughes is from Reuters Breakingviews. SOUNDBITE: Chris Hughes, EMEA editor, Reuters Breakingviews, saying, (English): "The problem for shareholders is that they've been quite wary of Vodafone doing big deals in the past, and here it is spending another few billion which given its track record in M&A some shareholders maybe quite concerned about but also you know the bigger it gets operationally, the more it does these deals, there is a question over how desirable it is as a takeover target." Convergence between fixed and mobile is taking place across Europe. Last week Numericable won a battle with Bouygues for Vivendi SFR. This week its backer Patrick Drahi promised to create a French "national campion." (SOUNDBITE) (French) NUMERICABLE ENTREPRENEUR PATRICK DRAHI SAYING: "I'm already going to invest 3 billion euros in France, which seems to me to be a massive repatriation. And if all other investors investing in France bring their own resources back here I'll do likewise." Numericable is paying 11.75 billion euros - the deal will leave SFR with a 32% stake in the new company. Vodafone maybe stealing the limelight with its new deal. But it's unlikely to be the last one. It's still flush with cash after selling its US arm Verizon for $130 billion.