UK investment firm Zegona ‘in discussions’ to buy Vodafone’s Spanish division

UK-based investment firm Zegona Communications is in talks with Vodafone regarding a potential acquisition of the telecom giant’s Spanish business.  

Madrid-based newspaper Expansión reported on Friday that the telecom investment company was seeking financing for a bid to buy the Spanish unit of Vodafone.

The report revealed the bid could value the unit at more than €5billion (£4.34billion) and Zegona could purchase a 50 per cent stake.

Zegona later confirmed it is ‘in discussions with Vodafone Group in connection with the potential acquisition, and with banks in relation to its financing.’

Vodafone is one of the three largest telecom operators in Spain together with Telefonica and the local unit of France’s Orange. 

Zegona cautioned that any deal was subject to agreement on final terms, due diligence and formalisation of funding arrangements.

‘Therefore, there is no certainty that the potential acquisition will proceed, nor as to the final terms of any such potential acquisition,’ it said.

The group’s revenues jumped in the last quarter on the back of price hikes, though this came at the cost of losing some cost-conscious customers.

Vodafone’s total revenues fell by 4.8 per cent to €10.7billion (£9.3billion) in the three months to the end of June, though on a comparable basis sales rose 3.7 per cent.

Strong performance in the UK, where it is merging with rival mobile network Three, helped offset declines in Germany, its largest market, as well as in Italy and Spain.

In June, Vodafone and Three struck a long-awaited £15billion merger deal to create Britain’s largest mobile network.

With a combined 27 million customers, the new joint venture will leapfrog EE and Virgin Media O2 to claim the top spot.

New Vodafone boss Margherita Della Valle described the deal as ‘a game-changer in our home market’.

But the announcement drew fears of higher prices for consumers.

The deal will face scrutiny by the Competition and Markets Authority (CMA) in a process analysts think could last 18 months, and will also need approval on national security grounds.

Vodafone shares are up by 0.69 per cent to 81.62p in morning trading on Friday.

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