Zegona buys Spain’s Telecable for €640m
July 27, 2015
By Colin Mann
Zegona – an operating company established in March 2015 with the objective of acquiring businesses in the European Telecommunications, Media and Technology sector – has reached agreement with global alternative asset manager, The Carlyle Group and Liberbank, to acquire Telecable de Asturias S.A., the leading quad-play telecommunications operator in Asturias, North West Spain, for an enterprise value of €640 million. Zegona will fund the acquisition with a combination of £251 million of new equity, backed by global institutional investors, funds from Zegona’s recent IPO and a new debt facility arranged by Goldman Sachs.
The transaction is expected to close by mid- August 2015.
“There is a significant opportunity to continue the impressive development of the Telecable business. By combining the local knowledge of the team in Spain with the international experience and track record of Zegona, we have the right leadership to drive Telecable forward and deliver its full potential,” commented Zegona Chief Executive Eamonn O’Hare.
“Telecable fits the bill in terms of our reasons for launching Zegona as it is a strategically strong business with considerable opportunity for top line growth and returns. It is also a regional champion underpinned by an extensive high speed fibre network. Our intention is to fully utilise the power of this network in order to differentiate ourselves and offer great value to customers. By leveraging our Virgin Media heritage, we will make Telecable a fierce competitor which delivers for customers and shareholders.”
Alejandro Martínez Peón, CEO of Telecable added: “This is a landmark day for Telecable as we become part of a dynamic, expanding listed entity on the London Market supported by very experienced industry sponsors who have a strong track record of growth and value creation. Zegona has the right capital structure in place to continue our Company’s growth and to cement our leadership position in the Spanish telecommunications market. After a period of continued growth supported by The Carlyle Group and Liberbank, I firmly believe that this is the right step to reinforce Telecable’s competitive position, bringing us a better future.”
Alex Wagenberg, Managing Director at Carlyle Europe Partners said: “It has been a real pleasure to work with the team at Telecable and our partners at Liberbank over the past four years. Despite the challenging economic climate, we worked tirelessly with the superb management team. This ensured they delivered consistent year-on-year growth in terms of revenues, EBITDA, market penetration, while maintaining their technological and service leadership and minimal customer turnover. We also leveraged Carlyle’s in-depth know-how and scale with regard to the telecommunications and cable sector sector which was a key factor in creating value for our investors and for the Company’s continued success.
Telecable, based in the northern region of Asturias, was the last independent cable telco company in Spain, following Basque Country-based operator Euskaltel’s €1.155 billion acquisition of Galicia’s R Cable on July 24 to create a large regional cable group in the north of Spain. Euskaltel had been understood to be seeking a merger with Telecable further to consolidate the Spanish telecoms sector following Vodafone’s €7.2 billion acquisition of ONO in March 2014 and Orange’s €3.4 billion purchase of Jazztel in September 2014.
Zegona was established by ex-Virgin Media executives O’Hare (Chairman and Chief Executive) and Robert Samuelson (Chief Operating Officer) with the aim of employing a ‘Buy-Fix-Sell’ strategy, in the European TMT sector, focusing on network-based communications and entertainment opportunities. Launching the company, they said its investments would target strategically-sound businesses that require active change to realise full value, creating significant long-term returns through fundamental business improvements. Zegona’s objective is to create a concentrated portfolio of sizeable assets with enterprise values in the range of £1 billion to £3 billion.
According to Zegona, the current dynamics of the European TMT sector, with the rapid growth of data consumption, convergence of services and consolidation of operators, create multiple investment opportunities and the potential to realise attractive returns with its strategy.
O’Hare and Samuelson are credited with helping lead the transformation of Virgin Media and its strategic sale to Liberty Global for $24 billion, crystallising $14 billion of incremental shareholder value.