Euskaltel ‘close to deal’ with Zegona to create Spanish regional cable powerhouse

Spanish cable operator Euskaltel could be close to striking a deal with UK-based Zegona Communications to take over Zegona-owned Telecable, creating a regional cable powerhouse in northern Spain, according to local press.

According to Spanish financial daily Expansión, Euskaltel, which operates in the Basque Country and – via subsidiary R – in Galicia, is close to striking an agreement with Zegona to create a group with revenues of €750 million and EBITDA of €360 million.

According to the paper, the pair have been quietly discussing combining their operations for months, but have recently come close to achieving a consensus on the valuation of Asturias-based Telecable, the main hurdle in the way of a deal.

According to Expansión, the deal would likely see Euskaltel pay a mix of cash and shares for Telecable, making Zegona a shareholder of reference in the Basque operator alongside Kutxabank. Euskaltel would also initiate a capital increase, with Zegona subscribing through a payment in Telecable shares.

According to the paper, a deal would also allow the group to expand to other territories such as Cantabria, Navarra, La Rioja and Léon. It said that both groups had been in talks to roll out a network in Cantabria in partnership with local player Ibiocom, backed by the regional government.

The tie-up follows Zegona’s failure to expand outside the Asturias region by losing a battle to acquire mobile operator Yoigo to MásMóvil.

Zegona meanwhile has made some readjustments to its board and executive team. It has named finance director Dean Checkley as its new CFO in place of Howard Kalika, and appointed Rightmove non-executive director and former Engine Holding CFO Ashley Martin as an independent non-executive director.

Zegona said that Kalika would now focus on new investments and evaluating attractive opportunities across the European TMT space.

Martin will serve as chairman of the audit and risk committee and a member of the nomination and remuneration committee. Robert Samuelson will step down fro both committees, while Mark Brangstrup-Watts will step down from the audit and risk committee, meaning that both committees now comprise only non-executive directors.