Vodafone and Liberty locked in cable war Liberty Global is going head to head with Vodafone to buy Spain's largest cable operator as the pair intensify their battle to snap up big chunks of Europe's broadband infrastructure. A bidding war for Ono, which analysts value at up to €7bn including debt, would pit the UK's biggest telecoms company by market value against John Malone's cable company for the second time in as many years. Vodafone is already in talks with the private equity owners of the Spanish group, which is also considering a flotation later this year. The US billionaire sought to derail Vodafone's approach for Kabel Deutschland last year with a bid of his own, forcing the British telecoms group to raise its offer. Vodafone was also linked with Ziggo, the Dutch cable group that on Tuesday agreed a €10bn deal with Liberty, while both have been rumoured as potential buyers for other businesses such as Italy's Fastweb. It has been a race between them to get the upper hand in each of their main markets. Spain is the last big market for them to fight over," said Robin Bienenstock, analyst at Bernstein. But Vodafone shareholders will be reluctant to sanction a deal at too high a price. The two companies have spent more than $45bn on acquiring cable and fixed line businesses in Europe since 2011, although they clashed most aggressively in the bidding for Germany's Kabel Deutschland last year. The chase for cable deals underlines how both companies are racing to create a pan-European cable and telecoms group. Mr Malone built his empire on cable video but his strategy is increasingly centred on owning the fibre "pipes" that deliver internet and online services. Through Liberty Media group, he is also the driving force behind a $61bn battle to control Time Warner Cable and consolidate the US cable industry. Vodafone also sees fixed line networks as an important means of reaching customers - carrying its mobile signals and also complementary fixed broadband and TV services. The acquisition spree has helped boost valuations of the region's cable operators, with some analysts fearing a bubble in valuations that could cause unrealistic asking prices. "Some of these valuations are completely inflated, especially for assets which are not growing any more, like Ziggo," said a London-based analyst, who asked not to be named. Some of them are completely overpriced, because the markets are expecting buyouts. Vodafone's thirst for European fixed-line networks puts it at odds with the strategy being pursued by AT&T, which earlier this week ruled itself out of a bid for the UK telecoms group in the next six months. Analysts suggest that a future bid from AT&T would be less likely were Vodafone to bulk up on European cable assets. Spain is the last big market for them to fight over Robin Bienenstock, Bernstein analyst The owners of Ono, which include Providence Equity Partners, Thomas H. Lee Partners, CCMP Capital Advisors, and Quadrangle Capital, have begun preparations for a flotation in Madrid to benefit from the surge in investor interest in cable assets. Neither group has made any approach to the board of Ono, people familiar with the situation said, adding that the approaches were "preliminary" and the management remained committed to a flotation. Vodafone, Ono and Liberty declined to comment. At Vodafone's half-year results, Mr Colao said that Vodafone would consider buying fixed-line businesses in countries where it could not build a partnership with a local company on attractive terms. He admitted that Liberty and Vodafone were increasingly pursuing similar strategies. "Liberty is coming to mobile in the same way as we're approaching fibre," he said, adding that the two companies occasionally "have discussions about potential joint ventures." Analysts suggest that the two might ultimately make a strong tie-up, although there would now be overlapping businesses in countries such as Germany that would raise opposition from the competition regulator. Liberty has spent almost $30bn in the past two years on buying Virgin Media in the UK and Ziggo in the Netherlands, adding to its 2011 acquisition of Germany's Kabel Baden-Württemberg for €3.2bn. It made a $2.5bn bid in 2012 to buy the shares of Belgian cable operator Telenet it does not already own. Vodafone, meanwhile, acquired Kabel Deutschland last year for €7.7bn and Cable & Wireless Worldwide for £1bn in 2011. In an interview with the FT last year, Tony Ball, the British pay-TV expert who sits on the board of both Ono and Kabel Deutschland, acknowledged the re-rating in values of the sector but said that this reflected climbing customer numbers and the popularity of internet services. Additional reporting by Henry Mance