According to bankers familiar with the company, the appointment of a new CEO for Vodafone’s Spanish operations could prompt the company to reevaluate its position in that market.
Colman Deegan, the CEO of Vodafone Spain, will retire on March 31. The telco is still looking for Deegan’s replacement. Margherita della Valle, a former finance director, was named Group CEO in January, as was previously mentioned.
One banker presenting Vodafone with solutions advised against ruling out a total exit from Spain. He argued that doing so would enable the business to forego expensive 5G investments and instead focus on securing a leadership position elsewhere. According to a second banker offering solutions, there have been rumors that Vodafone may consider leaving Spain.
Vodafone is focused on four markets: Italy, Portugal, Spain, and the UK, according to della Valle in a trading update from last month. She also stated that consolidation will be a key component of her strategy. According to reports, Vodafone is considering options for its African business and is close to a tie-up with CK Hutchison’s [HKG:0001] British subsidiary Three UK. It has been suggested elsewhere in this news service’s Flash column that a deal for Liberty Global’s Dutch JV Vodafone Ziggo could result from the company’s recent stake purchase in the UK telco (NASDAQ:LBTYA).
The appointment of a new Spanish CEO would be a sensible time for Vodafone to sell its operations there, the first banker suggested, given the possibility of deals elsewhere.
A third banker offering solutions warned that regulators might oppose that kind of consolidation. Companies might resist regulatory demands, he acknowledged, and the selection of a new Vodafone Spain CEO would be “the perfect time” for a strategic change. However, he maintained that it would be better for Vodafone to take a sizable one-time writedown on its exposure to Spain before entering a network sharing agreement with one of the regional competitors to reduce costs.
With a 15.6% market share in terms of retail revenues as of the third quarter of 2022, Vodafone, the country’s third operator behind Telefonica and Orange, reported a Spanish EBITDA of EUR 957 million for the year ending in March 2022.
Regardless of whether Vodafone completes a potential sale of its own infrastructure assets in the country, the first banker acknowledged that if it stays in Spain, its best option may be to come to a network-sharing agreement with Telefonica or Orange.
Prospects for infrastructure sales
Vodafone has reportedly been considering selling its Spanish infrastructure, with an asking price of about EUR 4 billion and Evercore handling the deal, according to local press reports. According to press reports from last month, Ardian, the owner of Adamo, and Macquarie Capital, the primary owner of the telecoms group Onivia, have both expressed interest.
A source with knowledge of the situation said that the potential sale process is still ongoing. A second source, however, claimed that media coverage has been “a little over-excited”.
The first and third bankers concurred that negotiations for the sale of Vodafone’s infrastructure have been unsuccessful and added that buyside valuations have been difficult.
Vodafone’s spokesperson declined to comment. Macquarie Capital and Evercore declined to comment. Requests for comment from Ardian went unanswered.
