Vodafone Sells Struggling Spanish Operations to Zegona for €5bn in Bid to Increase Profitability

Zegona to fund the acquisition through new debt, equity raise and Vodafone financing; Vodafone to license brand and provide services to Spanish unit for yearly charge of €110m.

• Vodafone sells its struggling Spanish operations to Zegona Communications for €5bn (£4.4bn). This deal is part of Vodafone's strategy to refocus resources in markets with sustainable structures and sufficient local scale, overseen by new CEO Margherita Della Valle.
• The deal will be financed by €4.1bn in cash, up to €900m in Vodafone financing by way of redeemable preference shares, and an equity raise of up to €600m by Zegona. As this constitutes a reverse takeover, it is subject to London Stock Exchange rules.
• The deal will see Zegona take up a 10-year contract to license the Vodafone brand in Spain and to continue receiving some services from Vodafone, all for an annual service fee of €110m.
• The move comes as Vodafone aims to improve its competitiveness and growth prospects in key markets following announced job cuts and plans for a £15bn merger with Three in the UK, the latter expected to create the UK's largest mobile network.
• Zegona's acquisition of Vodafone's Spanish unit is the third such venture by the investment vehicle after their success with Telecable and Euskaltel. The firm's top executives express confidence in creating significant value for shareholders with this move.

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