Vodafone CEO describes sale as part of “right-sizing” effort
Vodafone is existing the highly-competitive Spanish market with the sale of its business there to Zegona Communications. According to Vodafone, it’s receiving €4.1 billion in cash and €900,000,000 in “redeemable preference shares…for an amount comprising the subscription price and accrued preferential dividend, no later than six years after closing.”
Margherita Della Valle, Chief Executive of Vodafone, said: “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. I would like to thank our entire team in Spain for the dedication to our customers and relentless determination to improve our organic performance. However, the market has been challenging with structurally low returns.
“My priority is to create value through growth and improved returns. 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.”
In the UK, Vodafone and Three UK are working to get approval for an $18 billion merger billed as benefitting British consumers, infrastructure and jobs. “We believe that actually jobs will be created as a consequence of this merger both for building the network, and to create and support the IT systems, and to maintain this new network,” Vodafone UK’s Corporate Affairs and Sustainability Director Nicki Lyons said in a statement.
In commentary published by Reuters, the potentiality is called out that leaving Spain could get “messy…Della Valle lacks an obvious partner in the country: local giant Telefónica is too big, while rivals Orange and MásMóvil are merging with one another.” With regard to the potential buyer, “Tiny Zegona would have to borrow heavily to buy the whole thing, meaning it would be risky for Della Valle to remain exposed by lending to the buyer. A joint venture, meanwhile, would see a large chunk of the asset remain on Vodafone’s balance sheet until Zegona or another player could afford to buy it outright. That won’t help the parent group’s valuation much.”
