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Cable’s ONO takes loss on rev hike

Company still labors under large long-term debt

MADRID — Emerging as an increasingly important cable TV player in Spain, ONO posted net full-year losses of E87.6 million ($115.5 million), 28% lower than 2003, off revenues of $661.7 million, 40% up on 2003.

Operating cash flow margins rose from 29% in 2003 to 37% in 2004. ONO shareholders include General Electric (23%), Bank of America (11.5%), Caisse de Depot et Placement du Quebec (11.5%), Spanish construction firm Grupo Ferrovial (9.7%) and bank Santander Central Hispano (18.3%).

Like other cable TV ops, ONO still labors under large long-term debt — in Ono’s case, $1.6 billion — which takes a large chunk out of its cash flow.

It refinanced for further growth last year via a new bond issue in May and recent access to a syndicated loan of $1.65 billion.

Boasting 804,934 clients by year-end 2004, ONO’s main business remains fixed telephony with 697,934 customers. But cable TV subscribers rose by 31% from 339,378 in 2003 to 445,484 a year later.

ONO has two challenges: to continue growth despite competition from Telefonica’s new broadband content service, Imagenio, and to convert itself into a truly national player.

It took steps in the latter direction last year, buying up regional cable op Retecal and starting ops in Castille-La Mancha.

Santander Central Hispano controls around a third of shares in ONO and triple play rival Auna, and is anxious to cut its industrial portfolio.

“The most likely scenario is a merger between ONO and Auna with the merged company sold to a private equity firm within two years,” said Glenn Spencer Chapman, an analyst at Ibersecurities.

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