Zegona Communications plc
2 January 2025
Vodafone Spain and MasOrange
sign FibreCo contract
Zegona Communications plc (LSE: ZEG)
("Zegona") is pleased to announce Vodafone Holdings Europe, S.L.U.
("Vodafone Spain") and MasOrange, S.L. ("MasOrange") (together the
"Parties") have today entered into a binding contract to create a
new fibre network company in Spain ("FibreCo").
FibreCo will bring together network assets of Vodafone Spain and
MasOrange to create a 100% fibre-to-the-home ("FTTH") network
covering 12.2 million premises across Spain. This will be the
largest and most highly developed FibreCo in Europe, benefiting
from having virtually all its FTTH network already built and with
nearly 40% existing network utilization, providing FTTH services to
over 4.5 million1 Vodafone Spain and MasOrange
customers. These customers will have access
to the leading high-speed FTTH network in Spain, with FibreCo
ensuring the rapid adoption of new technologies such as XGSPON.
Vodafone Spain will use FibreCo to provide services to its existing
and future retail and wholesale customers within FibreCo's
footprint. The network will be a benchmark for sustainable
development, meeting high ESG standards including delivering
significant energy savings through more efficient use of network
assets.
The FibreCo is expected to have a
run-rate EBITDA of circa €480 million after 3 years2.
The Parties have recently launched a process to bring a third-party
financial investor into the share capital of FibreCo, which will
lead to MasOrange retaining 50% ownership, Zegona expected to hold
10% and the financial investor 40%. Initial interest from investors
is strong, reflecting the high quality and utilisation of FibreCo,
its already built FTTH infrastructure and the multi tenant nature
of the company. As a result, we expect FibreCo to be a highly
valued asset commanding a significant valuation premium.
In November 2024, Zegona announced
it had signed binding contracts with Telefónica de España
("Telefonica") to create a new fibre network company covering 3.6
million premises across Spain and to renew its fibre wholesale
access contract with improved terms. The combination of these
transactions with the new FibreCo with MasOrange completes the
transformation of Vodafone Spain's fixed line strategy, delivering
full FTTH services nationally.
The transaction is subject to
customary regulatory approvals. FibreCo completion together with
the introduction of the third-party investor is expected by the end
of the first half of 2025.
Eamonn O'Hare, Chairman and CEO of
Zegona, commented "Entering this FibreCo partnership with
MasOrange, alongside our recently announced agreements with
Telefonica, transforms Vodafone Spain's fixed line strategy. The
combination will give guaranteed access to a future-proof all fibre
national network with attractive economic terms and will enable
substantial cost savings across the business. Monetising these two
FibreCos is expected to deliver very significant Zegona
proceeds, generating the ability to reduce leverage and provide a
return of capital to shareholders."
Enquiries
Tavistock (Public Relations adviser - UK)
Lulu Bridges / Katie Hopkins /
Ruairi Millar
Tel: +44 (0)20 7920 3150
About
Zegona
Zegona was established in 2015 with
the objective of investing in businesses in the European
Telecommunications, Media and Technology sector and improving their
performance to deliver attractive shareholder returns. Zegona is
led by former Virgin Media executives Eamonn O'Hare and Robert
Samuelson. On 31 May 2024, Zegona completed the 100% acquisition of
Vodafone Spain for €5.0 billion.
About Vodafone
Spain
Vodafone Spain is a national
provider of fixed, mobile and TV services in Spain, serving
consumer, business and public administration customers. It was
acquired by Zegona in May 2024.
About
MasOrange
MasOrange provides fixed, mobile and
TV services for residential and business customers across Spain and
is the market leader by number of customers. MasOrange was formed
in 2024 through the combination of Orange Spain and MasMovil and is
owned 50% by Orange Group and 50% by Lorca JVco Ltd, which is
majority owned by Providence, Cinven and KKR.
1 Customer number including Vodafone
Spain customers to be transferred from current Telefonica wholesale
service to FibreCo
2 Based on Zegona's projections for
FibreCo
