Vodafone Group PLC agreed Saturday to pay £537M to buy the Italian and Spanish assets of Sweden's Tele2 AB, adding some 2.6M customers to its base including 550,000 customers in Spain and 400,000 broadband users in Italy. "This acquisition ... will generate substantial time to market benefits in Italy and Spain, where low broadband penetration and the market structure make ownership of fixed broadband assets attractive," said CEO Arun Sarin. "We have now established a clear route to delivering fixed broadband services in each of our major European markets." Mobile-phone operator Vodafone currently has no broadband operations in either country. One analyst, however, called the deal "more short-term tactical than long-term strategic" for the company, as it already controls Hutchison Essar, which has a huge market share; he said it was "like buying an extra candy bar at the grocery store." The acquisition was expected to be "broadly neutral" to earnings in the first year following the purchase. Vodafone beat out Fastweb SPA, Tiscali SPA and WindSpA, who reportedly were interested in the assets.
Sources: Wall Street Journal, MarketWatch, Financial Times
Commentary: Vodafone UK: No Niche Left Unturned • Vodafone Activists Should Show More Patience - Barron's
Stocks/ETFs to watch: VOD. ETFs: IYZ, TTH, BDH. Competitors: FTE, DT, NTT
Earnings call transcript: Vodafone Group FY 2006
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