Written by Mary Lennighan
Vodafone has inked a deal to sell its Spanish business to UK-based investment firm Zegona Communications for as much as €5 billion.
The deal will see Vodafone receive at least €4.1 billion in cash and up to €900 million in preference shares. That’s a decent earner for Vodafone, which has been under pressure from investors to streamline its business and reverse an apparently endless share price decline for a number of years.
As is often the case with telecoms M&A, the deal comes as no surprise. Vodafone Spain’s future has been the subject of debate for the past few years; the telco reportedly held merger talks with MasMovil in 2021, ultimately losing out to Orange, which is still navigating the regulatory process at European level. Talk has intensified over recent months, with Vodafone apparently hiring advisors to help it decide what to do in Spain, and in September Zegona emerged as a likely buyer.
Hence, we were really just waiting for a formal announcement.
It came on Tuesday, with Vodafone chief executive Margherita Della Valle essentially reiterating the telco’s strategy of slimming down and trying to keep shareholders happy.
“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,” she said, describing Spain as a challenging market with structurally low returns.
“My priority is to create value through growth and improved returns,” delle Valle said, a message she has shared a number of times since formally taking over from her predecessor Nick Read in April. “Following the recently announced transaction in the UK, Spain is the second of our larger markets in Europe where we are taking action to improve the Group’s competitiveness and growth prospects.”