Vodafone has confirmed the sale of its Spanish operations to Zegona Communications as part of a strategic reshaping of its portfolio to drive future growth.
The agreement is valued at €5 billion, consisting of €4.1 billion in cash and up to €0.9 billion in Redeemable Preference Shares (RPS).
Once the transaction closes, Vodafone will continue to deliver services to Vodafone Spain under a pre-agreed annual service fee of approximately €110 million to ensure continuity for customers during the transition.
Margherita Della Valle, Chief Executive of Vodafone, said:
“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.
My priority is to create value through growth and improved returns.”
This transaction follows Vodafone’s recent activity in the UK and reflects the company’s broader strategy to enhance competitiveness and growth prospects across Europe.
The sale to Zegona highlights Vodafone’s intent to optimize its asset base and concentrate investment where it can generate the strongest returns.
Transaction highlights:
- Financial terms: The consideration includes at least €4.1 billion in cash and up to €0.9 billion in RPS. The €5 billion enterprise value corresponds to a multiple of 5.3x Adjusted EBITDAaL and 12.7x OpFCF for the 12 months ending 31 March 2023.
- Funding: Zegona has secured fully committed debt facilities of up to €4.2 billion to cover the cash portion. In addition, Zegona plans to raise equity through an institutional placing of new shares subject to market conditions.
- Brand licence agreement: After completion, Vodafone and Zegona will enter into a brand licence allowing the Vodafone brand to be used in Spain for up to 10 years.
The deal remains subject to approval by Zegona shareholders and relevant regulatory clearances, with completion expected in the first half of 2024.
The transaction not only underscores Vodafone’s drive to streamline operations but also positions Zegona as a significant competitor in the Spanish telecommunications market.
(Photo by Egor Myznik on Unsplash)
See also: Global utilities set to invest £2B by 2026 in private cellular networks