Fitch Ratings has placed Vodafone Group Plc's 'A-' long-term Issuer Default Rating (IDR) on Rating Watch Negative (RWN), following the announcement of its intentions to acquire 100% of the share capital of Grupo Corporativo Ono, S.A. (Ono) in an offer representing an enterprise value of EUR 7.2 billion for Ono.

We will likely downgrade Vodafone's rating by one notch if it acquires Ono without taking other measures to reduce debt. Vodafone's leverage is currently low for a 'A-' rating with funds from operations (FFO) adjusted net leverage expected to be 1.2x at the end of March 2014.

However, the planned acquisition of Ono, and expenditure on Project Spring over the next few years, could push this metric to above 2.5x within 18 months, which is the upper end of the leverage range for a 'A-' rating. The acquisition of Ono should significantly improve Vodafone's competitive position in Spain, which accounted for 6% of Vodafone's consolidated EBITDA in 1HFY14.