After more than a month of market speculation, the British investment fund Zegona announced yesterday that it has bought 100% of Vodafone España's shares for 5,000 million euros.
The transaction has been closed following an agreement whereby the Vodafone Group will grant a loan of up to €900 million through an investment in preferred shares in a newly created entity, EJLSHM Funding Limited, which will use the funds to subscribe to new Zegona ordinary shares. Vodafone undertakes not to exercise its voting rights in Zegona and this fund to repay these shares within six years.
For its part, Zegona will make a capital increase of 600 million and will allocate all the amount it is able to raise in the market above 400 million to refinance the debt contracted with Vodafone.
Zegona hopes to be able to close the operation during the first quarter of 2024, after obtaining the relevant authorization from the Spanish Government. From then on, the aim is to "optimize all the company's current assets", as confirmed yesterday by Eamonn O'Hara, founder and CEO of the fund to journalists. "We see many opportunities in Vodafone España if it is managed well the company We are very excited about the opportunity to return to the Spanish telecommunications market. This attractive acquisition is our third operation in Spain, after the success of Telecable and Euskaltel. With our clearly defined strategy and our proven track record, we are confident of creating significant value for shareholders", assured O'Hara.
To generate this value, Zegona wants to put at the head of Vodafone España José Miguel García, one of the most highly rated managers in the telecommunications sector in Spain and with an extensive career linked to Zegona.
The fund was the owner of the Basque operator Telecable and later a majority shareholder in Euskaltel until it sold its stake to MásMóvil in 2021. García was at the head of these investments. "Betting on him is a declaration of intent. He is an executive who has a reputation for being very aggressive in the commercial field. If he is in charge, the market can be prepared for a whole war of offers, promotions, packages with multiple services", explain sector sources.
In any case, the challenge ahead is titanic. Vodafone drags a large slab derived from one of the most erroneous decisions in the sector in Spain, the acquisition of Ono's fiber network for 7.2 billion euros in 2014. Nine years later, the company as a whole only in worth 5,000 "The network is underutilized, with a penetration of 20%-25%, which is not very efficient, so we have to find how we can get more value, optimize it and increase traffic", acknowledged yesterday the CEO of Zegona.
The Vodafone Group put its Spanish division up for sale in May after years of falling profits and losing customers in Spain.
The agreement announced yesterday guarantees that, despite the change of owner, the brand will remain in Spain, at the very least, for the next decade.
Vodafone España currently has around 13 million mobile phone customers in Spain, almost 3 million fiber and 1.5 million television customers, in addition to its own network that serves 11 million homes. Its turnover is close to 4,000 million euros per year and the gross operating profit (ebitda) is around 950 million.
The big doubt about this operation for the sector is how Zegona will finance the remaining 3,600 million to close the operation. "It is not out of the question that other interested funds, such as RRJ, or that it sells the assets", point out sources in the sector.
