Euskaltel completes Telecable acquisition

Spanish regional cable operator Euskaltel has completed the acquisition of Zegona Communications-owned Asturias region operator Telecable.

Completion of the deal follows approval by the Bilbao-based operator’s shareholders and a green light by the country’s competition watchdog, the CNMC.

The acquisition of Telecable creates a single cable operator covering the Basque Country, Asturias and Galicia, where Euskaltel already owns the local player, R. The three northern Spanish regions provide a market of six million people, served by a group with 800,000 customers, revenues of €711 million and EBITDA of €346 million last year. The combined operator has a penetration rate of about 67% of triple and quad-play offerings

By competing the deal, Euskaltel has achieved a key objective it set at the time of its flotation on the stock market, becoming the leading convergent player in the northern part of Spain.

UK-based Zegona said that the completion would be followed by a return of £140 million to its shareholders via a tender offer, representing 44% of the company’s market capitalization.

The deal leaves Zegona with a 15% in Euskaltel, with Zegona COO Robert Samuelson and former Com Hem COO Jon James joining the company’s board. The UK outfit expects to take a significant role of setting Euskaltel’s future direction.

“When we acquired Telecable in 2015, we identified the clear opportunity for substantial value creation through combining the three independent cable operators in Northern Spain. This transaction turns that vision into reality, generating attractive returns for our shareholders and offering the potential for further significant value gains,” said Zegona chairman and CEO Eamonn O’Hare.

“Zegona has a strong commitment to ongoing cash returns and today’s announcement to return up to £140 million to shareholders quickly and tax efficiently, delivers on that commitment. In addition, Zegona sees potential to deliver a ‘second leg’ of value through its 15% shareholding in Euskaltel. We have established an excellent rapport with Euskaltel’s board, senior management and key shareholders, and look forward to working with them to improve the business and close Euskaltel’s current valuation gap versus industry peers.”