Why Vodafone sells its Spanish assets to the Zegona fund
Vodafone sells its Spanish operations for 5 billion to the British fund Zegona. All the details
Vodafone exits the Spanish market.
The British telecommunications group sells Vodafone Spain to the Zegona Communications fund for a value of 5 billion euros, of which at least 4.1 billion in cash and up to 900 million euros in preference shares redeemable within six years of the closing.
The agreement, we read in a note, also provides for Vodafone to provide a series of services to Vodafone Spain for an annual value of 110 million euros. Closing is expected in the first half of 2024.
The Spanish deal marks the latest part of the company's plan to rationalize its operations after shares fell to 20-year lows earlier this year, and follows the announcement by Margherita Della Valle (pictured), CEO of Vodafone, in May of 11,000 job cuts, highlights Reuters .
As the Financial Times reminds us, Vodafone's objective is now to improve its competitiveness and growth prospects. All the details.
THE SALE OF 100% OF VODAFONE SPAIN TO THE ZEGONA FUND
In buying 100% of Vodafone Spain, Zegona beat out other bidders, including private equity firm RRJ Capital, run by former Goldman Sachs banker Richard Ong, sources told Bloomberg .
Bloomberg also recalls that Zegona has already played a key role in the consolidation of the sector in Spain. Based in London, founded in 2015 and run by former Virgin Media Ltd. executive Eamonn O'Hare, the investment firm bought and sold Spanish operator Euskaltel SA to Masmovil Ibercom, a deal that boosted the telco market Spanish from five to four operators. O'Hare said he was "very excited" about the opportunity to return to the Spanish telecommunications sector.
VODAFONE'S EXIT FROM THE SPANISH TLC MARKET
“The sale of Vodafone Spain is a key step in giving the right size to our portfolio for growth and will allow us to focus our resources in markets with sustainable structures and sufficient local dimension,” commented Margherita Della Valle, CEO of Vodafone, underlining how the Spanish market had become "challenging, with structurally low returns". “My priority is to create value through growth and improve returns. After the transaction recently announced in Great Britain – he added -, Spain is the second of our largest markets in Europe where we act to increase the competitiveness and growth prospects of the group”.
Vodafone has struggled to grow in Spain's highly competitive market and Della Valle launched a strategic review of the Spanish unit earlier this year.
Previous CEO Nick Read also said the Spanish market needed consolidation. Vodafone is in third place among Spanish telecoms after Telefonica and Orange but was left on the sidelines when its rivals agreed to merge. Orange and Masmovil Ibercom are in fact awaiting the regulatory green light to merge in an agreement that will create the largest Spanish operator, ahead of Telefonica.
AFTER CONSOLIDATION IN THE UK
Meanwhile, last June, Vodafone announced its intention to merge its mobile operations with Three UK owned by the Hong Kong conglomerate CK Hutchison in June . CK Hutchison owns the Italian telecommunications company Wind Tre.
If approved by regulators, the deal will create the country's largest telephone company, to stimulate competition and investment in Britain.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-vodafone-vende-le-attivita-spagnole-al-fondo-zegona/ on Tue, 31 Oct 2023 10:48:32 +0000.