Deal Agreed to Sell Vodafone Spain to Zegona for €5 Billion
Vodafone has announced that it has entered into binding agreements with Zegona Communications to the sale 100% of its Spanish business. It is the latest revamp of the European mobile network under new CEO Margherita Della Valle, in a bid to improve growth.
Soon after her appointment to the role of CEO earlier this year, Della Valle announced that 11,000 jobs, more than 10% of the total workforce, will be cut over the next three years, saying that the telecoms company’s full year financial results were, ‘not good enough’.
On completion of the sale of Vodafone Spain, Vodafone’s consideration will comprise at least €4.1 billion in cash and up to €0.9 billion in the form of Redeemable Preference Shares (“RPS”) which redeem, for an amount comprising the subscription price and accrued preferential dividend, no later than six years after closing
Vodafone and Zegona have entered into an agreement whereby Vodafone will provide certain services to Vodafone Spain for a total annual service charge of c.€110 million.
Della Valle said, ‘The sale of Vodafone Spain is a key step in right-sizing our portfolio for growth and will enable us to focus our resources in markets with sustainable structures and sufficient local scale. I would like to thank our entire team in Spain for their dedication to our customers and relentless determination to improve our organic performance. However, the market has been challenging with structurally low returns.
My priority is to create value through growth and improved returns. Following the recently announced transaction in the UK, Spain is the second of our larger markets in Europe where we are taking action to improve the Group’s competitiveness and growth prospects.’
Vodafone and Zegona will enter into a brand licence agreement, which permits the use of the Vodafone brand in Spain for up to 10 years post-completion. Vodafone and Zegona will enter into other transitional and long-term arrangements for services including access to procurement, IoT, roaming and carrier services.
The Zegona Group has significant relevant experience in the Spanish telecommunications market, including through its ownership of Telecable and shareholding in Euskaltel. Eamonn O’Hare, Zegona’s Chairman and CEO, said, ‘We are very excited about the opportunity to return to the Spanish telecoms market. This financially attractive acquisition marks our third deal in Spain after successful turnarounds at Telecable and Euskaltel. With our clearly defined strategy and proven track record, we are confident that we can create significant value for shareholders.’