Vodafone's 7.2bn-euro offer for Spanish telecoms group Ono is a "vital strategic move", according to Jefferies, which said that a stabilisation of the UK group's business in Spain is now possible.

"The clear positive from this morning [...] is that VOD is addressing a key strategic weakness proactively, delivering on management's commitment to be credible in fibre convergence in key markets on a five-year view," the broker said.

"Against the backdrop of 60% Spain [operating profit] decline between 2010 and 2014, stabilisation becomes a credible prospect, especially against the backdrop of (gradually) improving macro."

The broker said that the total consideration of €7.2bn in cash is in line with most expectations, while total cost and revenue synergies of €3bn are double the €1.5bn it had estimated.

"To the extent that there may have been some concern at the end of last week that VOD's bid could creep closer to €8bn, the outcome could be considered positive."

Jefferies maintained a 'hold' recommendation and 238p target price for Vodafone.

The stock was 1.1% higher at 224.55p by 09:34 on Monday.

BC

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