Zegona ‘looking for new deal’ after Telecable sale

Alan Burkitt-Gray
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Zegona shareholders to get £140m after sale of Telecable to Euskaltel, as CEO looks for new telecoms acquisition

UK-based investment company Zegona has confirmed its plans to return £140 million to shareholders after it merged its Telecable business in Spain with Euskaltel.

Now the company, whose shares are listed on the main market of the London Stock Exchange, is looking for a further telecoms investment.

The total cash returned to Zegona shareholders up to the end of 2017 will equal 55% of initial equity invested, said the company – and its shareholders will still have a 15% stake in the combined Euskaltel/Telecable.

“Today, Zegona is delivering on its commitment to return £140 million to shareholders quickly and tax-efficiently,” said Eamonn O’Hare, Zegona’s chairman and CEO. “We are also reconfirming our intention to pay £9.8 million in dividends for 2017. As a result, Zegona will have returned 55% of shareholders’ initial investment, while retaining a 15% shareholding in the enlarged Euskatel business.”

The company has an enterprise value of €3 billion to €4 billion, he said in an interview with Global Telecoms Business – making Zegona’s stake worth €450 million to €600 million. Zegona bought Telecable in 2015 for €640 million. The full interview will be published shortly.

He is hoping that Euskaltel, which is based in the Basque Country, an autonomous region of Spain, will be involved in a further deal “with one of the three big players” in the country: Telefónica, Vodafone or Orange.

O’Hare, the former CFO of UK cable operator Virgin Media who managed its £15 billion sale in 2013 to Liberty Global, is now looking for a further investment by Zegona, but will go to the company’s existing backers for more funds if he does find a target.

He put the potential investment between €1 billion and €3 billion. “We have a long list of 15,” he told Global Telecoms Business – a number cut from an original list of 60-70. “We will be crunching a shortlist of five”, and then will seek to do one deal within three years, he added. “If we can’t find a really good deal I will give the money back and will go do something different.”