It’s now official: Zegona buys Vodafone Spain. After weeks of rumors that intensified this weekend, the investment group has confirmed the purchase in exchange for 5,000 million euros. After 22 years of operations in our country, Vodafone Spain changes hands and begins a new period in the market that will coincide in time with the merger between Orange and the MásMóvil Group.
Zegona has just announced the purchase of Vodafone Holdings Europe, SLU (“Vodafone Spain”) for 5,000 million euros. All the details regarding this are given in the published press release. This figure paid represents a multiple of 3.9x EBITDAaL. The investment group explains that it will finance the purchase through a combination of new debt and a capital increase. It has committed to finance debt worth 4.2 billion euros with banks such as Deutsche Bank, ING and UniCredit, it will have a credit line of 500 million euros and Vodafone will provide up to 900 million euros of financing.
What does the purchase of Vodafone Spain mean?
As we have already mentioned, the purchase of Vodafone Spain changes everything in our country and will make the next few years very intense in terms of competition. In addition to this operation, the merger between Orange and the MásMóvil Group will soon be authorized, which, among other things, will catapult Digi to be the fourth operator in the country.
In the signed agreement, Zegona secures a brand license that will allow it to use the Vodafone brand for up to 10 years, although there will also be other long-term agreements on acquisitions, Vodafone IoT, mobile roaming and operator services.
Eamonn O’Hare, CEO of Zegona, said: “We are very excited about the opportunity to return to the Spanish telecommunications market. This attractive acquisition marks our third deal in Spain after successful restructurings at Telecable and Euskaltel. With our clearly defined strategy and proven track record, we are confident we can create significant value for shareholders.”
The British investment fund bought Telecable in 2015 and tried to repeat the move four more years with Yoigo. In 2019, he was unable to acquire the firm that finally ended up integrated into the MásMóvil Group and the rest is history.
As we explained last weekend, José Miguel García, former CEO of Jazztel and Euskaltel, will take charge of the operator in this new stage. This will culminate in 22 years in Spain after being built in 1997 from the Airtel brand. Sector sources have confirmed that with the former Jazztel and Euskaltel man at the helm “we will have a new DIGI competing with greater commercial aggressiveness.”
José Miguel García has a degree in Electrical and Electronic Engineering with a master’s degree in Digital Communications from Monash University in Melbourne. From 2006 to 2015 he was the CEO of the successful Jazztel which Orange bought for billions of euros. Later, since mid-2019, José Miguel García held the position of CEO of Euskaltel. Now, he will begin a new stage at the head of Vodafone Spain and, without a doubt, it will be one of his greatest challenges.
The truth is that the value of Vodafone in Spain has plummeted in recent years and the company needed a radical change to remain relevant. In the last year, income fell by 7%, but we cannot forget that a few years ago it paid 7,200 million for ONO and today the entire company is worth “only” 5,000 million euros.
These are the reasons why Zegona buys Vodafone according to the investment group itself:
- Vodafone is the third operator in Spain with important market shares in mobile, broadband and TV
- It is a business with significant cash flow potential.
- It is a convergent operator with presence in both the residential and consumer markets.
- It has three solid brands and a good customer base
- Its network has gigabit capacity to serve 10.7 million homes
- The 4G and 5G mobile network is market-leading and of high quality
