Vodafone warchest 'up to USD40bn' after Verizon sale; big India, Spain deals on horizon

11 Feb 2014

UK telecoms giant Vodafone Group could have the capacity to spend between USD30 billion and USD40 billion on acquisitions in coming years, Reuters reports citing the company’s CEO Vittorio Colao. Speaking at a media roundtable, the executive noted that Vodafone Group will explore a number of possibilities regarding large-scale purchases, while funds from the USD130 billion asset sale to Verizon Communications, expected to be completed later this month, will also be invested in the group’s existing business. ‘We are looking at acquisitions that are sizeable and could transform the company,’ Mr Colao said, adding: ‘The theory is that if an acquisition makes sense you should not be worried by the size because shareholders should approve it.’ According to the report, Vodafone Group may have as much as USD40 billion to spend, after returning a significant portion of the funds generated by the Verizon deal to shareholders.

Although Mr Colao did not name any particular acquisition targets, he was reported to have said that Vodafone Group remains keen to build up its fixed line assets in Europe. Meanwhile, in terms of the best opportunity for acquiring mobile assets, the executive said that the company may look to emerging markets, noting: ‘There’s not really many situations where Vodafone can buy another mobile operator … I can think of maybe two, maybe three with some emerging markets.’

In separate but related news, at the end of last week Vodafone Group reportedly secured approval from the Indian cabinet for its GBP981.8 million (USD1.6 billion) deal under which it will buy out the minority partners in its local unit. Under the terms of the deal, Vodafone Group will acquire an almost 11% stake in Vodafone India from India’s Piramal Enterprises, along with the remainder held by investors including Indian businessman Analjit Singh, to bring its holding in the cellco to 100%.

Back in Europe, meanwhile, following reports at the end of January 2014 which suggested that Vodafone Group was mulling an offer for Grupo Corporativo ONO, Bloomberg is reporting that the British outfit has now approached the Spanish cableco’s owners about a potential acquisition. The development comes as ONO meets this week to discuss an initial public offering (IPO) or a sale, people familiar with the matter said. Any bid by Vodafone Group would likely have to be between EUR7 billion and EUR8 billion (USD9.5 billion and EUR11 billion) to win the backing of ONO’s board, it has been claimed. While Mr Colao did not comment directly on the matter at the executive roundtable, he was cited as saying: ‘Spain is one of the markets where we see convergence is more advanced … It’s one of the markets we clearly are looking at.’

India, Spain, United Kingdom, Grupo Corporativo ONO, Vodafone Group, Vodafone India, Vodafone Spain