Vodafone sells its business in Spain: possible moves by Zegona

The €5 billion sale of Vodafone to Spain's Zegona is by far the most significant deal to have taken place in the telecoms industry in the last two decades. The implications of this deal have already been partially outlined in some areas, but its effects will be felt over the coming months and many questions still remain.

The recent announcement of the sale of Vodafone Spain has no impact on the current business and service. We are fully committed to providing the best experience for our customers

-as confirmed by sources within Vodafone Spain.

And, indeed, for their customers the world does not end, as Carlos Galán tells us in this article. Below you can find out more about the main''Areas that will be affected by the acquisition of Vodafone Spain, the first change of ownership of a wholesale operator in our country in the last 20 years.

The future of more than 3,000 Vodafone employees in Spain is in doubt due to cost cuts planned by Zegona.

By the end of 2022, Vodafone had 3,060 employees in Spain.

The CEO of Zegona, Eamonn O'\''Hare, told a press conference on Tuesday that reducing staff numbers at Vodafone Spain is not currently a priority for the management company, and it was not one of the main points of the British company's proposals.

But that doesn't mean layoffs won't happen. In fact, employees of Vodafone''Spain was already anticipating the consequences of the strategic plan announced by the company in May, which called for the layoff of 11,000 employees internationally out of the estimated 96,000 employees it had at the beginning of 2023. Some of the 3,060 employees, of course, were to be affected.

Although their buy-rebuild-sell strategy may cause a contrary assumption, Zegona has not been particularly aggressive with staff at the Spanish operators it has acquired in the past, as no major mass layoffs were announced after the deals.

Factually, most of Telecable's staff were integrated into Euskaltel after its acquisition, and then the same happened to employees''Basque telecom in MásMóvil.

The entry of Zegona could accelerate or trigger changes to Vodafone's network

As a wholesale operator with one of the three most important fixed and mobile networks in Spain, the acquisition of Vodafone's subsidiary in our country is expected to also affect the network infrastructure.

Zegona has already hinted at the direction it wants to take once the deal is finalized.

"Fixed infrastructure is very important to us. But the reality is that penetration is only 20-25%, so we need to find ways to make the network more valuable and extract more value by optimizing it and attracting more traffic," as the company's CEO stated.

Although the plans are far from detailed,''At the moment Vodafone is at an important moment for its fixed network as it still uses copper central offices, but Telefónica will close them in 2024, coinciding with its centenary, as announced this summer.

This puts Vodafone, as well as Orange, in a difficult position because neither of them can currently do without their copper network, the precursor to fiber optic cable, which is still required to run the infrastructure of the vast majority of global telecoms companies.

The bulk of Vodafone's copper network is now the result of its purchase of Ono in 2014, the fourth operator at the time of the acquisition for €7.2 billion, more than Zegona has now paid.

At the moment Zegona''there are only two options regarding Vodafone Spain's copper network: either agree with Orange and Telefónica to shut it down, or convert all that wireline to fiber-optic FTTH cable, which may currently prove too costly for the pockets of Zegona, which financed much of the purchase through debt.

Vodafone's attitude towards retailers and mobile virtual operators (OMVs) could change.

Like all other wholesale operators in Spain, Vodafone has always sought to ensure that the agreements it enters into with retailers to use its fixed or mobile network do not harm it in terms of pricing.

Although it is logical to assume that Zegona will retain this policy to protect investment for the future,''may change due to government protection from the OPAS and Orange-MásMóvil merger measures

Some of the consequences that can be foreseen in the months following the announcement of the purchase could also affect Zegona itself and its outlined plans.

The British company said the deal could close within four to five months and expects it to be completed in the first quarter of 2024.

Before that, it must get approval from competition regulators - notably Spain's National Market and Competition Commission (CNMC) - as well as from the government, which will analyze the deal under the so-called "OPAC safeguard shield" as previously announced.

Despite Zegona's confidence, this''The process could take longer, although the deal is unlikely to be canceled.

Another thing that is about to happen in the telecoms sector and could affect the purchase of Vodafone Spain is the merger between Orange and MásMóvil, awaiting the approval of the European Commission and above all the decision on remedies.

Orange hopes that the merger will also take place in the first quarter of 2024, which could mean that, depending on the environment and the conditions set by Brussels, the final value of Vodafone Spain could change if there is any market-dependent variable in the agreement signed between the parties.

The former head of Jazztel and Euskaltel becomes head of the executive committee

And finally,'''One area that is certain to change in the coming months is the supreme leadership of Vodafone Spain.

Zegona has announced its intention to appoint Jose Miguel Garcia, an old acquaintance of the Spanish telecoms sector, as chief executive of the operator in Spain.

García was CEO of Euskaltel until MásMóvil acquired the Basque operator in 2021, and was previously CEO of Jazztel.

This means his current position, held by Portuguese Mario Vaz and appointed just a few months ago after leading Vodafone's business in Portugal, will be vacated.

Antonio Coimbra, director of Vodafone Spain, left his post on September 30, so the change of ownership''The operator is no longer affected, but the departure is also likely to affect senior employees of the telecoms company in our country.

5G is at an impasse and the sale to Vodafone is unlikely to change that

Although Zegona has given some clear or less clear indications about its plans for Vodafone's fixed network, it has not given many clues about its strategy for mobile networks, which are currently in the midst of a 5G rollout that is going through some difficulties.

The only point that has been confirmed is that Zegona has a roaming agreement with parent company Vodafone, so that consumers from other countries will be able to continue to use data in Spain at no extra cost, a