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* Deal is 3rd buy of European fixed-broadband asset in 2 yrs
* Allows Vodafone to offer combination of services in Spain
* Vodafone targets around 240 mln euros savings in 4 yrs
* Price is multiple of 10.4x Ono's operating free cash flow
By Kate Holton
LONDON, March 17 (Reuters) - Vodafone Group Plc hasagreed to buy Spain's largest cable operator Ono for 7.2 billioneuros ($10 billion), in the latest move by the British group torebuild its European operations with a broadband offering.
Vodafone said on Monday the deal would enable it to offer acombination of mobile and fixed-line telephony, pay-TV andbroadband in one of its largest European markets, hit hard byfierce competition and the effects of a lengthy recession.
The deal for private equity-owned Ono is Vodafone's thirdpurchase of a European fixed-broadband asset in two years,allowing it to offer an increasing range of services and offloadsome of its mobile traffic on to Ono's cable network.
The British group, which is rebuilding its core Europeannetworks with proceeds from the $130 billion sale of its U.S.arm, said it would also save around 240 million euros, beforeintegration costs, by the fourth full year after completion.
"The combination of Vodafone and Ono creates a leadingintegrated communications provider in Spain and represents anattractive value-creation opportunity for Vodafone," thelatter's Chief Executive Vittorio Colao said.
A 7.2 billion euro price tag implies a multiple of 10.4times the target's operating free cash flow, broadly in linewith recent deals in the European cable and telecoms sector.
Ono, which had been in the process of preparing for a stockmarket flotation, has 1.9 million customers on its network thatcovers 70 percent of Spain, or 7.2 million households out of atotal of 16 million.
Having built the network later than other cable and telecomcompanies, it can achieve broadband speeds of up to 200 megabitsper second, or up to 20 times the average of rival networks.
The deal for Ono, which is mostly present in more ruralparts of Spain, also complements the cable network Vodafone hasbegun building with Orange SA in major Spanish cities.
Ono is 54 percent owned by investment funds ProvidenceEquity Partners, Thomas H. Lee Partners, CCMP Capital Advisorsand Quadrangle Capital.
