Following reports over Vodafone Group plc’s (VOD - Analyst Report) plans of acquiring Madrid-based provider of broadband and entertainment services, ONO, in Feb, the company has now come up with a revised proposal worth €7 billion or $10 billion for the buyout. According to Bloomberg, Vodafone in its meeting with key shareholders on Mar 5, came up with this bid although the final agreement is yet to be decided upon.
Meanwhile, ONO is preparing for its initial public offering slated to be released this month. The acquisition is expected to bode well for the company’s growth in data services by aiding its broadband infrastructure.
Vodafone has taken growth initiatives through acquisitions and partnerships in emerging markets like Asia, Eastern Europe and Africa. The company continues to aggressively pursue acquisitions or investments in incipient markets, making itself more competitive against other European telecoms like Telef (TEF - Analyst Report), Orange (ORAN - Analyst Report) and Telecom Italia S.p.A. (TI - Snapshot Report).
The company acquired a 76.48% stake in Kabel Deutschland for €7.7 billion ($10.21 billion) in Sep 2013, and settled on a domination agreement requiring payment of €84.53 per share to the remaining shareholders. We believe that the successful completion of the domination agreement will strengthen Vodafone’s position in the acquired company. Moreover, in the same month, Vodafone reached an agreement with Verizon to sell its 45% interest in Verizon Wireless for $130 billion. The company closed the deal on Feb 21, 2014. In Sep 2013, the company also announced plans to buy Verizon's stakes in Vodafone Italia, which is around (23.14%), for $3.5 billion. Moreover, the company struck a wholesale agreement with Deutsche Telecom for offering high-speed fixed-line broadband and Internet protocol-based TV services across Germany.
In Spain, the company is gaining from its tie-up with Orange and has also entered into a vertical access agreement with Telefonica for accessing the fiber optic network. In Greece, Vodafone entered into an active 2G and 3G network sharing agreement covering rural and urban areas. In Portugal, the company has started the extension of its fiber-to-the-home program, targeting to double the number of homes covered to approximately 1 million.
Vodafone also has plans for the Asian market. It is reportedly in talks to buy Indian broadband and telecommunication company, Tata Teleservices Ltd. Further, Vodafone is reportedly going solo in the country with the complete acquisition of its Indian joint venture, Vodafone India. With increasing number of customers seeking data services, strong marketing campaign and flexible price plans, Vodafone expects continued growth in the sub continent.
Vodafone has a Zacks Rank #3 (Hold).