Zegona sells stake in Spanish broadband for €1.4 billion euro windfall

Zegona Communications has secured a significant boost after announcing the sale of a 25 per cent stake in its Spanish broadband joint venture with MasOrange to Singaporean sovereign wealth fund GIC for €1.4 billion. This deal leaves Zegona holding a 17 per cent interest in the full fibre network operated under the Vodafone Spain brand. The telecoms group originally acquired Vodafone Spain from the FTSE 100 telecoms giant last year, marking its most high profile transaction since its founding by former Virgin Media executives Eamonn O’Hare and Robert Samuelson in 2015.

Zegona has focused on acquiring and transforming undervalued telecom companies in Europe using its distinctive buy fix sell approach. Its journey began with the purchase and subsequent sale of Spain’s Telecable, followed by this recent €5 billion acquisition of Vodafone’s Spanish operation. The company, while little known in the wider business community, has come into the spotlight due to the substantial compensation package awarded to chief executive Eamonn O’Hare who received £131 million last year including £129 million in share incentives and nearly £1 million in basic salary.

Partnerships with local operators have been central to Zegona’s strategy. The joint venture with MasOrange, Spain’s largest mobile network operator, is just one of two broadband collaborations in the region. Zegona also retains a 37 per cent stake in a separate tie up with Telefónica, where negotiations to introduce a minority investor are said to be well advanced. These moves align with Zegona’s ambition to monetise existing assets and unlock value by attracting external capital.

Zegona now boasts a market capitalisation of £7.2 billion though its standard listing means it remains outside of the FTSE 100 index. The firm’s shares have enjoyed a robust rally, rising from just over 31p at the time of the Vodafone Spain deal announcement in 2023 to close up by 66p at 936p in London yesterday, a gain of more than seven per cent.

The management believes this latest divestment will put the company in a strong position to introduce a shareholder friendly capital allocation policy, with further announcements expected in the coming months. This development highlights the effectiveness of Zegona’s asset focused investment model and its determination to challenge established players in a rapidly evolving European telecom landscape.