Zegona confirms in talks to buy Vodafone Spain

Eamonn O’Hare

UK-based investor Zegona Communications, the former part-owner of Spanish cable operator Euskaltel, has confirmed it is in talks to buy Vodafone España.

Zegona confirmed to the London Stock Exchange that it is in discussion with Vodafone about acquiring the Spanish operation, and with banks in relation to its filing. The confirmation followed reports about the acquisition in Spanish financial daily Expansión.

It said a potential acquisition is subject to agreement on final terms, completion of due diligence and formalization of funding.

During the company’s last quarterly earnings call, Vodafone CEO Margharita Della Valle said “structural change” was very much necessary in Spain in the context of market conditions. She said the company was “considering a range of options” but it was too early to comment on these.

The Spanish unit’s service revenue declined by 3% in the quarter to June due to a lower customer base and continued price competition in the Consumer value segment, partially offset by price increases.

Zegona’s acquisition, if it goes ahead, would take the form of a reverse takeover, meaning that Zegona would need to apply for readmission of its shares on the London Stock Exchange.

As a result the UK watchdog, the FCA, has suspended its listing on the Official List and trading on the main market of the stock exchange has also been suspended.

Zegona’s deadline

Following the sale of Euskaltel to MásMóvil in 2021, Zegona gave itself two years to re-invest in another European TMT sector operation before consulting on returning its remaining assets to shareholders.

The company said it would continue to execute its Buy-Fix-Sell strategy across the European TMT sector with a focus on businesses that require active change to realise full value, targeting business valued at between £2-5 billion.

Vodafone was mooted as a potential partner in consolidation by Zegona when it was Euskaltel’s major shareholder. Zegona CEO Eamonn O’Hare told DTVE at the time that mid-sized cable operators were the most attractive target for the company for further investment opportunities.