Zegona Communications today announced that it has entered into binding agreements with Vodafone Group for the acquisition of its Spanish subsidiary, Vodafone Spain. This move marks Zegona's return to the Spanish telecoms market and follows successful deals involving Telecable and Euskaltel.
Also Read: 4iG Successfully Completes Vodafone Hungary Takeover
Transaction Details
According to the official release, this acquisition values Vodafone Spain at an enterprise value of EUR 5.0 billion, equivalent to 3.9x EBITDAaL. The transaction involves at least EUR 4.1 billion in cash and up to EUR 0.9 billion in Redeemable Preference Shares (RPS). Additionally, Vodafone has committed to providing specific services to Vodafone Spain in return for an annual service charge of around EUR 110 million.
The funding for this acquisition will come from a combination of new debt, Vodafone Financing, and a new equity raise. Zegona has entered into committed debt financing of EUR 4.2 billion and a revolving credit facility of EUR 0.5 billion. Vodafone will provide up to EUR 900 million in financing, and Zegona plans to raise up to EUR 600 million in equity from third-party investors before completion.
Also Read: Orange Spain Pilots 5G Plus Powered Immersive AR Experience in Six Cities
Zegona's Outlook
Zegona expressed enthusiasm about the acquisition, marking the company's return to the Spanish telecoms market. Zegona stated, "This financially attractive acquisition marks our third deal in Spain after successful turnarounds at Telecable and Euskaltel. With our clearly defined strategy and proven track record, we are confident that we can create significant value for shareholders."
Zegona sees Vodafone Spain as strategically attractive, being the third-largest player in Spain with significant market shares in mobile, broadband, and TV segment, Gigabit capable fixed network passing 10.7 million homes with access to around 95 percent coverage, along with mobile network with 45/5G Spectrum usage.
Also Read: Liberty Global Acquires 4.9% Stake in Vodafone Group
Brand License Agreement
Following the completion of the transaction, Vodafone and Zegona will establish a brand license agreement, enabling Zegona to use the Vodafone brand in Spain for up to 10 years post-completion. The two companies will also enter into additional arrangements for services, including access to procurement, IoT, roaming, and carrier services.
The transaction is expected to be completed in the first half of 2024, subject to regulatory approvals and other conditions.
