Mobile phone giant Vodafone agrees to sell its Spanish business

It comes just over four months after it announced a long-awaited merger deal in the UK with Three owner CK Hutchison to create Britain’s biggest mobile phone network worth £15bn.

Under the Spanish sale, UK-based European telecoms investor Zegona Communications will pay at least 4.1 billion euros (£3.6bn) in cash and a further 900 million euros (£786m) in financing in the form of preference shares.

The pair said they have also agreed that Vodafone will provide “certain services” to Vodafone Spain for an annual service charge of around 110 million euros (£96m).

The deal is expected to complete in the first half of 2024.

Vodafone Spain is the third biggest telecoms network in the country after Telefonica and Orange.

The group launched a strategic review of the business in Spain earlier this year after suffering hefty sales falls, blaming a highly competitive market.

Ms Della Valle said: “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.”

She said the Spanish market had been “challenging with structurally low returns”.

She added: “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.”

Zegona is led by former Virgin Media executives Eamonn O’Hare and Robert Samuelson.

Mr O’Hare, who is chairman and chief executive of Zegona, said: “We are very excited about the opportunity to return to the Spanish telecoms market.

“This financially attractive acquisition marks our third deal in Spain after successful turnarounds at Telecable and Euskaltel.

“With our clearly defined strategy and proven track record, we are confident that we can create significant value for shareholders.”

The merger of Vodafone and Three could create thousands of new jobs in the sector, the two companies recently told MPs, amid ongoing scrutiny of the proposed deal. Andrea Dona, Vodafone UK’s network and development director said that the company’s own estimates suggest the deal “could create up to 12,000 jobs”.