News

Vodafone Group to Sell Spanish Unit to Zegona Communications

4.3

Clarence L. Polk

• October 31, 2023

Vodafone Group, a U.K.-based telecommunications giant, has reached an agreement to sell its Spanish unit to Zegona Communications, a European telecommunications investment company. The deal, valued at approximately 5 billion euros ($5.31 billion), includes the acquisition of 100% of Vodafone Spain.

The consideration for the sale consists of at least EUR4.1 billion in cash and up to EUR900 million in redeemable preference shares. These shares will be redeemed within six years of the transaction's closing, and the amount will be determined based on the subscription price and accrued preferential dividend.

Additionally, Vodafone and Zegona have entered into several agreements to facilitate a smooth transition. As part of these arrangements, Vodafone will provide certain services to Vodafone Spain for an annual fee of around EUR110 million. Furthermore, a brand license agreement allows Zegona to utilize the Vodafone brand in Spain for a period of up to 10 years following the completion of the transaction. Other potential services include access to procurement, "Internet of Things," roaming, and carrier services.

Eamonn O'Hare, Chief Executive of Zegona Communications, expressed enthusiasm for reentering the Spanish telecoms market.

Zegona Secures Financing for Acquisition

Zegona, a telecommunications company, has secured committed debt financing of EUR4.2 billion and a committed revolving credit line of EUR500 million to fund its acquisition. In addition to this, Vodafone has provided EUR900 million in financing for the transaction. Zegona also plans to raise between EUR300 million and EUR600 million in equity from institutional investors.

The acquisition, which is considered a reverse takeover, is expected to be completed in the first half of 2024, pending approvals from shareholders and regulatory clearances. Zegona aims to complete the transaction in the first quarter, and trading in its shares has been suspended until the publication of a prospectus on the acquisition.

Vodafone Chief Executive, Margherita Della Valle, stated, "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." The group will assess the best utilization of the proceeds from the sale upon completion.