Euskaltel buys from Zegona all of the Asturian operator Telecable

17/05/2017

Euskaltel buys from Zegona all of the Asturian operator Telecable The group will offer its services to a market of 6 million people, now paying 2.4 million daily services to more than 800,000 customers, obtaining 711 million euro consolidated revenues, EBITDA of EUR 346millones and a cashflow of 224 million.

Euskaltel and Zegona have reached Wednesday an agreement by which the Basque group will acquire 100% of the Asturian operator Telecable. The transaction has been approved unanimously by the Board of Directors of Euskaltel, and will culminate the process after the ratification at the next meeting of shareholders of the Group and the approval by the competition authorities.

This operation means the creation of fiber optic leading convergent operator in the North. Year and a half after the agreement of integration of Euskaltel and R, Telecable joins group, which from now on will offer its services to a market of 6 million people, increasing 20% market of the group, with 2.4 million daily services to more than 800,000 customers, with a high ratio of penetration (67%) of 3 and 4 products in its customer base.

The sum of the three markets in which it operates (Basque country, Galicia and Asturias) Euskaltel represents 12.76% of the population and 13.34% of the GDP of the whole of the State. From the financial point of view, the consolidation of the results increases Group revenues to 711 million euros (+ 24%), with an Ebitda of 346 million euros (+ 23%), a cash flow of 224 million euros (+ 21%), maintaining one of the highest ratios of cash generation in Europe in the sector.

The resulting group will keep the local character of Euskaltel, R and Telecable in Euskadi, Galicia and Asturias respectively, which translates in the continuity of its brands and professional teams.

Operation

The value of Telecable agreed was 686 million euros, including 245 million euros of its debt estimated at 30 June 2017 (which will be refinanced by Euskaltel), with a consideration of 186,5 million euros in cash and 26.8 million shares of newly issued which will be subscribed by Zegona at a price of 9.5 euros per share (254.6 million euros) which represents 15% of the share capital of Euskaltel after the capital increase, which will have to be approved by the next General meeting of shareholders.

This assessment is 8.5 times Ebitda post synergies, which confirms the interest of the operation in terms of value creation for shareholders.

After the operation, the ratio of debt to ebitda will be at 4, 5 x (including synergies), by the Group keep it compensation to shareholder under the terms announced to the market. In addition, Euskaltel expected that this ratio down to 4 times ebitda (including synergies) at the end of 2018, as communicated to the market.

After the capital increase, Kutxabank will feature a 21.3% of the shares and Corporaci n Financiera Alba figuring 9.35% of the capital. Major shareholders, including Zegona, have expressed throughout the talks their commitment with the rooting of the Euskaltel group in its territory.

Kutxabank and Alba, significant shareholders of Euskaltel representation on its Board of Directors, have expressed their support for the integration of Telecable and favorably valued the incorporation of Zegona as relevant to the project Euskaltel shareholder.

Euskaltel, Alberto Garc a Erauzkin, Group President has expressed his satisfaction because "this operation completes the great consolidation of the cable in the North of the State. Both Euskaltel, R and Telecable, we are leaders in our markets and the sum of the three large operators of the North makes us leaders in the State. Our intention is to maintain the values of each company, such as brands and the talent of its people, because they are the keys to its success. "We are a business project that finds its meaning in the generation of value for our stakeholders: shareholders, team and for the whole of the Basque, Galician and Asturian now societies, in which we operate".

Garc a Erauzkin explained that "our strategy is to create and consolidate leadership in our markets, compatible with maintenance of the rooting and the commitment in the three territories. Telecable in Euskaltel group integration is, in addition, the incorporation of Zegona, which will bring its extensive experience in the sector."

Francisco Arteche, Managing Director of the group, has valued very positively the result of the incorporation of Telecable, since "it implies the sum of a market, a team of people, and a telecommunications network that designing new advanced services. This sum of capabilities will incorporate significant growth potential to the group to follow starring the digital pulse of Basque, Galician and Asturian societies".

Arteche has highlighted that "this union will benefit customers, employees and suppliers, because we are companies that we share a firm and resolute commitment by the proximity, quality and innovation in products and services".

Eamonn OHare, Chairman and CEO of Zegona, has expressed his enthusiasm in relation to the consolidation of the North of Spains Euskaltel strategy: "when we acquired Telecable in 2015 identified enormous potential for creating value through a combination of 3 cable operators to separate from the North of Spain. This transaction makes that vision in reality and gives us an additional opportunity for a greater increase in value thanks to the high level of synergies that can be achieved and to the greater robustness of the combined business. As leading regional provider in Spain, Euskaltel is very sensitive to local needs in Asturias and will offer support and necessary support to Telecable and his team. We are eager to work closely with the Council of Euskaltel and his team for, so joint, participate in the following chapter of the growth of the Group Euskaltel and Telecable."

LINK:	http://www.panoramaaudiovisual.com/en/2017/05/17/euskaltel-compra-a-ze...
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