Vodafone almost ready to decide on Spain sale

Vodafone has hired advisors to help it make a decision on whether or not to sell its operations in Spain, and we should know the outcome within a few months.

So says Spanish newspaper Expansion, which quotes unnamed sources as saying that the telco is working with various external advisors, including Morgan Stanley and Garrigues, to examine the various strategic alternatives for Vodafone Spain.

The paper’s sources said that Vodafone will make a decision after the summer, so we’re probably looking at September. Indeed, The European Commission is due to conclude its investigation into the proposed merger of Orange Spain with MasMovil by 4 September, so that smart money is on Vodafone waiting until after that decision is published to make a final call.

On the subject of the Orange/MasMovil tie-up, Reuters reported earlier this week that the Commission will publish a statement of objections in the next few days. According to the newswire’s source, the Commission will warn that the deal could be anticompetitive, which will then likely lead the telcos in question to offer remedies. But we’ll have to wait and see on that score.

As far as Vodafone is concerned, the Orange/MasMovil deal would certainly have an impact on its Spanish business. It is currently the third-largest player in the four-operator mobile and fixed broadband sectors but only lags Orange by a small margin; post-merger it would be the smallest player in both by some distance. Thus the success or otherwise of the merger, and any competition remedies that could be applied, affect its market prospects and valuation, and would need to be taken into consideration when deciding whether to sell out.

However, while the industry awaits the result of the European Commission probe as a marker of how open Brussels is to in-market M&A in telecoms at present, that is less of a concern to Vodafone. It is being linked more with investors than it is strategic buyers.

According to Expansion, Vodafone has been in touch with a number of funds regarding the potential acquisition of the Spanish business, including Apollo Global Management and Apax Partners.

The paper cites data from Berenberg that puts the value of Vodafone Spain at around €3.9 billion, noting that that figure is well below the sum previously offered by MasMovil for Vodafone. Expansion reported in March 2021 that the pair were involved in merger talks that, if concluded, would value Vodafone Spain at €7.5 billion.

But the deal was never inked, of course. Vodafone Group, then led by former chief executive Nick Read, reportedly turned it down as being too low.

That €7.5 billion must look pretty tempting now…although Read has now departed and this week was named as the new chairman of fibre and subsea network operator Exa Infrastructure. As an aside, the UK press, the Telegraph included, were quick to pick up on the fact that Read received a pretty hefty payout – £3.9 million, to be precise – for the year to the end of March, despite the fact that he lost his job at the end of last year as a result of a woeful performance from the telco group.

It is now new chief executive Margherita Della Valle’s job to sort the telco out and appease disgruntled shareholders. A sale of Vodafone Spain might help on that score, depending on the price. We likely won’t know for a couple of months whether it really is looking to sell, but the writing does seem to be on the wall.

Get the latest news straight to your inbox. Register for the Telecoms.com newsletter here.