The acquisition of Vodafone Spain is valued at EUR5 billion

The Spanish government has approved the acquisition of 100% of the Vodafone Spain Group by U.K.-based investment firm Zegona Bidco, a fully owned subsidiary of Zegona Communications, the Council of Ministers said in a statement.

The transaction is valued at EUR5 billion ($5.41 billion) and will be financed with a combination of debt and equity.

The government noted that Zegona has presented various commitments in the authorization process through a strategic and financial plan. Specifically, Zegona guarantees the continuity of the service and contemplate future investments, mainly in mobile coverage with 5G technology, as well as to adopt measures that guarantee financial solvency.

In addition, Zegona has also committed to maintaining relevant contracts with the national administration and maintaining stability in the company’s strategic assets, the Council of Ministers said.

Vodafone and Zegona previously said they will entera brand license agreement, which permits the use of the Vodafone brand in Spain for up to 10 years post-completion. Vodafone and Zegona will enterother transitional and long-term arrangements for services including access to procurement, IoT, roaming and carrier services.

“The telecommunications sector is in a moment of profound reorganization, and it is the obligation of the public powers to guarantee that this strategic service is not only assured, but that it is reinforced when a major business operation occurs,” said the minister of Digital Transformation José Luis Escrivá. “With the commitments assumed by the buyer, we are convinced that Spain’s leadership in connectivity can be consolidated,” he added.

The Spanish Government has authorized the operation, which had been previously cleared by the Foreign Investment Board, of the Ministry of Economy, Commerce and Business after the scrutiny of the transaction. In addition, the Ministry for Digital Transformation and Public Service, through the Secretary of State for Telecommunications and Digital Infrastructure, has authorized Zegona to take control over the radio spectrum concessions held by Vodafone Spain.

The investment company is run by Virgin Media veteran Eamonn O’Hare and has a history in the Spanish telecommunications market, having been a major shareholder of Spanish telco Euskaltel prior to its sale to Masmovil in 2021.

Vodafone initially launched 5G services in Spain via Non-Standalone (NSA) architecture in 2019 while the telco launched a pre-commercial 5G Standalone (SA) network in June 2021.

In January of 2022, Vodafone Spain announced the start of the initial deployment of 5G coverage via the 700 MHz frequency in 109 municipalities in 30 provinces across the country, after the telco secured spectrum in the 700 MHz band in July 2021.

Vodafone had said that the 5G network in the 700 MHz frequency allows the telco to expand its coverage footprint extensively and offer better coverage inside buildings.

Vodafone said it is currently expanding its 5G network using the 700 MHz frequency with the aim of reaching 82% of the population and a total of 2,700 municipalities with its 5G service by the end of this year, exceeding the committed deployment obligations.

The European operator said it will deploy 5G in 147 towns with less than 1,000 inhabitants and in 553 towns with between 1,000 and 50,000 inhabitants during the rest of the year.