Bottom Line: Spanish assets are too rich for British blood
FORGET foreplay – in the telecoms world, getting on top and staying there is all about quad-play. The idea is that one provider supplies customers with all their fixed-line and mobile needs, bundling television, broadband, mobile and landline services into a single package. To do that, the provider needs access to a vast array of infrastructure and networks across different geographies – it’s no wonder the sector is buzzing with consolidation.
Ono ticks all the boxes, but it’s the firm’s position as Spain’s biggest cable operator that really has Vodafone boss Vittorio Colao – and his rival, Liberty Global’s John Malone – chomping at the bit. Vodafone has already been spending money in Spain, teaming up with Orange to develop a fibre network in bigger cities, but Ono’s infrastructure spreads out into more rural areas – giving Voda a broader platform from which to compete with dominant player Telefonica.
Of course the bidding war, played out behind closed doors and firmly in the hands of Ono’s private equity backers, has the potential to drive prices higher than the suitors – and their investors – might want.
It’s unlikely to be any skin off Ono’s nose. The Spanish firm is well on the way to a stock market return, with the improving economic climate in the country offering decent IPO conditions – all of which means it can afford to play hardball on price.
Vodafone may be able to afford a premium, but there’s only so far it can go without laying its ambitions – and shortcomings – bare. Ono is a valuable asset but the cost might just be too high.