Low Returns? Vodafone Divests Spain Business As Key Step In Right-Sizing Portfolio
Portfolio Pulse from Shivani Kumaresan
Vodafone Group Plc (NASDAQ:VOD) has agreed to sell 100% of Vodafone Spain to Zegona Communications plc. The deal, expected to complete in the first half of 2024, will comprise at least €4.1 billion in cash and up to €0.9 billion in Redeemable Preference Shares. Vodafone will provide a brand license agreement allowing Zegona to use the Vodafone brand in Spain for up to 10 years post-completion. The deal is expected to have a slightly accretive effect on Vodafone's adjusted earnings per share and a dilutive effect on free cash flow.
October 31, 2023 | 1:02 pm
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NEUTRAL IMPACT
Vodafone's sale of its Spain business to Zegona Communications is expected to have a slightly positive impact on its adjusted earnings per share but a dilutive effect on free cash flow.
The sale of Vodafone Spain is a significant move for Vodafone, as it allows the company to focus on markets with sustainable structures and sufficient local scale. While the deal is expected to slightly boost Vodafone's adjusted earnings per share, it is also expected to dilute free cash flow, which could have a neutral impact on the company's stock price in the short term.
CONFIDENCE 90
IMPORTANCE 75
RELEVANCE 100