Vodafone Spain sale gets green light

The sale is expected to complete at the end of this month, at which point Vodafone will receive €4.1 billion in cash and €0.9 billion in the form of Redeemable Preference Shares.

The firm intends to commence an initial €500 million share buyback programme tomorrow, as part of its plans to return €2 billion over 12 months.

Vodafone reportedly held merger talks with MasMovil in 2021 over its Spanish operation, ultimately losing out to Orange. Vodafone apparently then hired advisors to help it decide what to do in Spain, and in September Zegona emerged as a likely buyer. The deal was announced last October.

As we noted at the time, the deal does not necessarily mean the immediate disappearance of the Vodafone brand from Spain since the transaction includes a brand licensing agreement that allows Zegona to use the Vodafone name for up to 10 years after completion. Arrangements for access to procurement, IoT, roaming and carrier services were also agreed.

“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,” said Margherita Della Valle, Chief Executive of Vodafone at the time of the deal’s announcement. “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.

“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.”

Meanwhile Vodafone has just published its financials for the year to the end of March, which showed service revenue growth across its footprint, while a slide in operating profit was expected.