Vodafone agrees on deal to buy Ono

London - Vodafone has agreed to buy Spain's largest cable operator Ono for €7.2bn, in the latest move by the British group to acquire fixed-line assets to rebuild its European operations.

Vodafone said on Monday it expected to achieve cost and capital expenditure savings of approximately €240m, before integration costs, by the fourth full year after completion.

The deal for the private equity-owned group is Vodafone's third purchase of a European fixed-broadband asset in two years as the company seeks to improve its networks and shore up its European businesses after they were hit by fierce competition, the recession and regulatory cuts.

Vodafone has launched a programme to invest in its networks, and acquire assets where necessary, after selling its US arm for $130bn last year.

A €7.2bn price tag implies a multiple of 10.4 times the group's operating free cash flow, broadly in line with recent deals in the European cable and telecoms sector.

"The combination of Vodafone and Ono creates a leading integrated communications provider in Spain and represents an attractive value creation opportunity for Vodafone," Vodafone CEO Vittorio Colao said.