UK-based Zegona Communications, which was established in 2015 with the objective of acquiring businesses in the European telecoms, media and technology sectors and using a ‘Buy-Fix-Sell’ strategy to deliver attractive shareholder returns, has asserted that it is dissatisfied with the performance of Euskaltel – the regional Spanish operator in which it holds a minority stake.
Zegona acquired Gijon-based Telecable de Asturias for EUR640 million (USD788 million) in August 2015 and sold it on to regional cable group Euskaltel for EUR701 million in May 2017 – acquiring a 15% stake in the enlarged Euskaltel in the process. Derio-based Euskaltel had previously acquired Galicia-based R Cable in November 2015. Zegona’s annual report notes: ‘Despite the encouraging market outlook, we are disappointed by the decline in Euskaltel’s share price since the closing of the sale of Telecable, which has resulted in a EUR41.5 million decrease in the value of the investment. Zegona’s nominated director has been actively involved in Euskaltel’s board and its committees, but we are disappointed that the extent of this input has not resulted in the effective action we believe is required within the Euskaltel business.’
Going forward, the company notes: ‘Beyond Spain, we continue to see a very healthy environment for acquisitions across the broader European TMT landscape. There has been an increase in deal activity and we have also seen growth in the availability of assets. We have continued to evaluate new acquisition opportunities and actively pursue those which initially meet our rigorous financial and strategic criteria.’