Vodafone offloads £4bn Spanish division as new CEO begins turnaround push
Vodafone has sold its Spanish business to London-based but European-focussed outfit Zegona, the telecoms giant confirmed to markets this morning.
Vodafone will receive £3.6bn in the deal alongside approximately £750m worth of preferential shares.
The telco giant has been struggling to deliver growth in a number of its European arms and new chief executive Margherita Della Valle took the job earlier this year warning the firm’s performance had not been good enough.
This morning Della Valle said in an update to markets: “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 their dedication to our customers and relentless determination to improve our organic performance. However, the market has been challenging with structurally low returns.”
Zegona has licensed the Vodafone brand in Spain for a further decade, and Vodafone has also secured an approximately £100m annual contract for services to Zegona.
Vodafone’s Spanish arm lost more than £300m in the last financial year.
The deal comes just weeks after Vodafone and Three-owner CK Hutchinson sealed the deal on a UK merger, though competition regulators are likely to have something to say.
The telecoms giant’s boss told Morning Wire recently that the deal would be good for consumers and for the UK’s digital infrastructure.
“Merging with Three would give us the scale we need to build one of Europe’s best 5G networks, which would drive innovation, create jobs, and boost the economy. And we’d be able to accelerate the roll-out of network improvements to all corners of the UK,” he wrote.
“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.” Della Valle added this morning.