Vodafone: Negotiations Underway to Divest 50% of Its Spanish Business Unit for EUR 5 billion

Spanish newspaper Expansion reported on Sept. 22 that no-moat Vodafone is looking to sell a 50% stake in its Spanish business to British investment company Zegona, which specializes in telecommunication investments. On Sept. 22, Zegona confirmed the report. According to the report, Zegona could buy up to a 50% stake and value the Spanish unit at around EUR 5 billion. This would represent a valuation of around 5 times EBITDA after leases, which we consider reasonable given the challenges Vodafone faces in Spain. We are not surprised by this announcement given Vodafone’s new CEO Margherita Della Valle indicated in May that the company was considering strategic options for the Spanish business unit. We maintain our GBX 125 fair value estimate.