REG - Zegona Comms. - €1.8BN RETURN AND 69% REDUCTION IN ORDINARY SHARES

Zegona CommunicationsAnnouncement

27/11/2025 07:00

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RNS Number : 1788J  Zegona Communications PLC  27 November 2025

27 November 2025
 
        LEI: 213800ASI1VZL2ED4S65

Zegona Communications plc

€1.8bn Return and 69% Reduction in Zegona Ordinary Shares

Zegona Communications plc (LSE: ZEG) today announces the proposed allocation
of the €1.8bn proceeds from the two recent FibreCo transactions1. The
proposal is to return €1.6bn to shareholders and use the remaining €200m
for debt reduction. The €1.6bn shareholder return includes a €1.4bn
special dividend (£1.62 per Zegona ordinary share(2)) and a €200m share
buyback programme(3). The special dividend will provide EJLSHM Funding Limited
("EJLSHM") with €975m to settle the Vodafone financing in full(4) and a
€440m pro rata payment for remaining ordinary shareholders. Settling the
Vodafone financing will enable a 69% reduction in Zegona ordinary shares.

€1.4bn Special Dividend (£1.62 per Zegona Ordinary Share)

 * The special dividend will provide EJLSHM with €975m to settle the Vodafone
financing in full.

 * The €975m includes a principal sum of €900m and €75m of accrued
return(4). €975m is equivalent to £1.62 per Zegona ordinary share held by
EJLSHM.

 * Settling the Vodafone financing in full will enable the cancellation of the
523m Zegona ordinary shares held by EJLSHM. This will reduce Zegona's ordinary
shares in issue by 69% from 759m to 236m(5).

 * The special dividend will provide a €440m pro rata payment to remaining
ordinary shareholders. €440m is equivalent to £1.62 per Zegona ordinary
share excluding those held by EJLSHM.

 * The special dividend repays the original equity capital raised for the
Vodafone Spain acquisition(6) plus an additional return of 12p.

€200m Share Buyback Programme

 * Zegona will initiate the €200m share buyback programme following the
cancellation of the 523m EJLSHM Zegona ordinary shares.

 * Zegona believes a share buyback programme will drive very attractive returns
to shareholders post the 69% share count reduction.

€200m Debt Reduction

 * €200m of the proceeds will be used to reduce Net Debt to €3.4bn and reduce
leverage to 2.58x(7).

 * This reduction in debt reinforces Zegona's commitment to its leverage target
of 1.5x-2x.

 * The €200m debt reduction further accelerates progress in reducing total
annual interest costs. Annual interest costs(8) have reduced from €294m at
the time of the Vodafone acquisition to €235m post recent refinancings.
Applying current market debt yields to the reduced net debt balance
demonstrates the potential to drive annual interest costs well below
€200m(9).

The full execution of this capital allocation proposal is dependent on the
completion of the FibreCo transactions and shareholder approval at a general
meeting to be convened shortly. A key part of the resolution at the general
meeting will be the removal of the requirement for six-months' notice for the
settlement of the Vodafone financing. Full details will be included in a
shareholder circular to be published soon.

Zegona expects the GIC investment in PremiumFiber (MasOrange FiberCo) to be
completed by the end of this calendar year and the AXA investment in FiberPass
(Telefonica FiberCo) to be completed by the end of the first quarter of the
2026 calendar year. The objective is to settle the Vodafone financing as
quickly as possible. Therefore, Zegona intends to execute the special dividend
once the proceeds from the PremiumFiber transaction have been received. Zegona
also intends to initiate the €200m share buyback programme following the
cancellation of the 523m EJLSHM shares. If the cancellation of the EJLSHM
shares occurs before the completion of the FiberPass transaction Zegona plans
to fund the early stages of the buyback programme with current balance sheet
resources.

Eamonn O'Hare, Chairman and CEO of Zegona, commented, "Today's announcement
marks another major milestone in the transformation of Vodafone Spain and
Zegona Communications plc. In just 18 months since the Vodafone acquisition,
we have delivered on every major element of our strategy, driving operational
progress, executing two landmark FibreCos, completing the transition to a 100%
FTTH network, and unlocking €1.8bn of proceeds. The capital allocation
proposal we have announced today is designed to be shareholder friendly,
whilst simplifying our capital structure, satisfying the needs of the business
and delivering a fit for purpose balance sheet. I am particularly pleased that
the special dividend allows us to reward our shareholders by returning their
original equity investment plus a little extra interest."

 

 Investor enquiries:                                                 Media enquiries:
 Alfonso Enríquez                                                    Jaime De Andres                                               Tilly Abraham (Sodali & Co)
 info (mailto:info@zegona.com) @zegona.com (mailto:info@zegona.com)  jaime.andres@vodafone.com (mailto:jaime.andres@vodafone.com)  zegona@info.sodali.com (mailto:zegona@info.sodali.com)

 

About Zegona

Zegona is publicly listed on the Main Market of the LSE. It was established in
2015 with the objective of investing in businesses in the European
Telecommunications, Media and Technology sector and improving their
performance to deliver attractive shareholder returns.  Zegona is led by
former Virgin Media executives Eamonn O'Hare and Robert Samuelson. In 2024,
Zegona completed the acquisition of Vodafone Spain. 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 as it forms part of domestic law of the United Kingdom
by virtue of the European Union (Withdrawal) Act 2018, as amended (together,
"MAR").  The person responsible for making this notification is Eamonn
O'Hare, Chairman and CEO.

 

Notes

(1) The GIC investment in PremiumFiber (the Vodafone Spain & MasOrange
FiberCo), was announced on 4 August 2025. Vodafone Spain will retain a 17%
stake. Zegona expects this transaction to be completed by the end of this
calendar year.

The AXA investment in FiberPass (the Vodafone Spain & Telefonica FiberCo),
was announced on 25 November 2025. This transaction is subject to customary
regulatory approvals. Vodafone Spain will retain a 5% stake. Zegona expects
this transaction to be completed by the end of the first quarter of the 2026
calendar year.

The above two transactions are expected to result in approximately €1.8bn of
upfront cash proceeds for Vodafone Spain, €1.4bn from PremiumFiber and
€0.4bn from FiberPass.

(2) Based on a EUR/GBP rate of 0.87. Actual GBP amount per share may change
with movements in the foreign exchange market and the exact payment date.

(3) The buyback programme will be carried out in accordance with a buyback
agreement entered into with Canaccord Genuity Limited. This provides for
on-market purchases, up to a total aggregate consideration of €200m
(exclusive of expenses), to be carried out under the authorities granted at
Zegona's 2025 AGM and any renewals of those authorities. During closed
periods, Canaccord will be authorised to make on-market purchases
independently and without influence from Zegona.

The buyback programme will commence after Zegona completes the cancellation of
the 523m Zegona ordinary shares held by EJLSHM. It will continue whilst Zegona
has shareholder authority and remains under the €200m limit.

(4) The redemption of the €900m of preference shares in EJLSHM held by
Vodafone Consolidated Holdings Limited (part of Vodafone Group PLC), payment
of €75m accrued preferential dividends plus EJLSHM winding up expenses, to
ensure full repayment of the Vodafone financing. Note this assumes repayment
in the first quarter of next calendar year. The final amount will vary
depending upon the exact payment date.

(5) Post repayment of the Vodafone financing, Zegona will re-designate the
Zegona ordinary shares held by EJLSHM as non-voting deferred shares with
negligible economic rights. This will reduce Zegona's ordinary share count to
235,969,302 shares. The deferred shares will be bought back for £1 in
aggregate and cancelled.

(6) £1.50 per Zegona ordinary share, raised in September 2023 for the
acquisition of Vodafone Spain.

(7) Net Debt / L2QA EBITDAaL as measured on 30 September 2025 and adjusted
for the €200m of debt reduction. On 30 September 2025 gross debt stood at
€3,933m and cash balances at €303m.

(8) Measured as an annual interest cost run rate, includes interest income on
cash held.

(9) Refinancings may include maturity extensions and new loans and/or new
bonds (including via private placement and/or tap issuance), subject to
existing call protection. Current trading levels of c3.75% yield-to-worst of
the EUR senior notes.

(#_ftnref1)

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