Major Sale to Drive Future Growth

Vodafone has officially announced the sale of its Spanish operations to Zegona Communications for €5 billion. This strategic move is part of Vodafone’s broader initiative to reshape its portfolio, focusing on markets that offer sustainable growth opportunities.

Deal Structure and Financial Terms

The transaction includes a cash payment of €4.1 billion and an additional €0.9 billion in Redeemable Preference Shares (RPS). This pricing reflects an enterprise value based on a multiple of Vodafone Spain’s recent earnings, confirming the substantial worth of this deal.

Ensuring Smooth Transition for Customers

Vodafone has committed to continue providing services to Vodafone Spain under an annual service charge of approximately €110 million. This agreement ensures a seamless transition for customers, maintaining service quality and continuity.

Vodafone CEO’s Statement on the Sale

Margherita Della Valle, Vodafone’s Chief Executive, emphasized the importance of this sale in aligning Vodafone’s portfolio for growth. She stated that the primary goal is to create value through strategic growth and improved returns, highlighting the sale as a pivotal step in this direction.

Part of Vodafone’s Larger European Strategy

This transaction follows Vodafone’s recent actions in the UK and is indicative of the company’s commitment to enhancing its position and growth prospects across Europe. It demonstrates Vodafone’s strategic focus on optimizing its assets and bolstering competitiveness.

Key Aspects of the Transaction

  1. Financial Terms: The sale’s financial structure includes at least €4.1 billion in cash and up to €0.9 billion in RPS. The deal values Vodafone Spain at a significant earnings multiple.
  2. Funding: Zegona has secured fully committed debt facilities to cover the cash component and plans an institutional equity raise, depending on market conditions.
  3. Brand License Agreement: Post-sale, Vodafone and Zegona will enter a brand license agreement, allowing the continued use of the Vodafone brand in Spain for up to ten years.

Approval Process and Anticipated Completion

The transaction’s completion is contingent on the approval of Zegona’s shareholders and regulatory clearances. The deal is expected to be finalized in the first half of 2024.

Implications for Vodafone and Zegona

This sale not only reinforces Vodafone’s strategic intent to streamline its operations but also marks Zegona’s emergence as a significant player in the Spanish telecommunications sector, reshaping the industry landscape.