Zegona Communications
Zegona Communications is a public holding company that owns Vodafone Spain with the transaction closing in 2024 at what was an attractive price (no other activity, previously owner of another Spanish Co Euskaltel). The stock has ripped since (x5), but has VERY shallow liquidity and digging into the movements one sees that action has been entirely driven by the Chairman and his COO pumping their own stock by buying shares on the open market since Dec 24. The company has also not published financials in a year.
TelCo market fundamentals in Spain are also terrible, even more so for the distant 3rd contender. Looks like they are also pausing or reconsidering their NetCo spin offs which would have unlocked value.
Wondering if anyone has more colour on the situation, as that looks incredibly fishy and an actionable short (tbd though given liquidity).
Also lots of rumors of Telefonica / digi interest in a potential sale.
I picked this up too but find it hard to believe regulator would allow market to further consolidate, at the very least there would be significant operational risk. MasOrange transaction took almost 2 years to close. And in the meantime operational performance just tanks because everyone is focused on getting the deal across the line.
But indeed run up in price might be justified by an acquisition bid (or at least destroy short thesis)
Look into the preferred share redemption. They can pay £1.50 per share and extinguish 69% of shares outstanding.
Yes I mean as far as I understand these shares come in essence from a vendor loan from Vodafone to the company through EFHAHAS holding (or whatever the name is) and don't have any voting rights anyway. Ofc if you redeem the pref you kill those shares but won't change governance or economics anyway.
The guys bought this company stumping up 200-300m of their own cash out of the 5bn - great deal initially but right now value looks inflated c.8x some fake ass adjusted EBITDAaL with flatlining performance and prospects.
But the equity value will be cut by 70% a year from today… meaning the multiple you’re using isn’t really indicative of the busienss
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