Vodafone confirms sale of Spanish arm to Zegona Communications

Published by

Giles Gwinnett

Telecoms giant Vodafone, which is headquartered in Newbury, told investors this week it is to sell its Spanish arm to London-listed Zegona Communications for up to €5 billion.

The consideration for the deal on Vodafone Holdings Europe, S.L.U will consist of at least €4.1 billion in cash and up to €0.9 billion in so-called redeemable preference shares (RPS) which redeem, for an amount comprising the subscription price and accrued preferential dividend, no later than six years after the deal closes.

"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," said Margherita Della Valle, who was appointed CEO of Vodafone earlier this year, after becoming interim CEO in December, replacing Nick Read.

"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," she added.

Vodafone and Zegona have entered into an agreement whereby Vodafone will provide certain services to Vodafone Spain for a total annual service charge of around €110 million.

The pair will also enter a brand licence agreement, which permits the use of the Vodafone brand in Spain for up to ten years post-completion.

As at end-March this year, Vodafone Spain had gross assets of €7.6 billion. For the 12-months to March 31, it generated a loss before tax of €383 million.

Zegona is led by former Virgin Media executives Eamonn O'Hare and Robert Samuelson.

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Giles Gwinnett

Giles Gwinnett is a writer at The Business Magazine. He has been a journalist for more than 20 years and covered a vast array of topics at a range of media settings - in print and online. After his NCTJ newspaper training, he became a reporter in Hampshire before moving to a news agency in Gloucestershire. In recent years, he has been covering the financial markets along with company news for an investor-focused web portal. His many interests include politics, energy and the environment. He lives in Dorset.