Spanish sector telecommunication He lives in a time of deep turmoil. Major operators lead real stock earthquakes through merger Orange-MásMóvil, Purchase contract Vodafone Spain for Zegona fundSaudi Arabia’s entry into Telefónica and the possible entry of the State… Moves that threaten to create a domino effect and drag down other actors in the industry.
Possibly ‘affected’ telecommunications companies in sectoral pools include: fine mesh and in financial sources, a new merger or acquisition is persistently shown as the object of desire, and especially as a new company.sure candidate Acquisition by British fund Zegona For its merger with Vodafone Spain following a 5,000 million euro purchase agreement.
“We are not for sale. We want to continue to be independent,” he says. Óscar Vilda, CEO of FinetworkHe categorically refuses any contact with Zegona, increasing possible absorption. “Acquiring Finetwork could make sense for Zegona. But no one contacted us. “Nothing”. The company is determined to maintain its autonomy and grow on its own, although it does not rule out listening to offers.
Born in Alicante and reaching one million customers in the Spanish market, 80% of the capital of the telecommunications company is controlled by its founder and chairman Pascual Pérez, while 20% is in the hands of managers and other minorities. “Our shareholding is completely national and we intend to keep it that way,” the manager summarizes in an interview with El Periódico de España of the Prensa Ibérica group. “Our priority is to be independent and not accept new partners”.
Discarded sales process
Last year Finetwork launched a process to explore possible offers To gain new partners for its shares with the opportunity of total sales. Three acquisition offers came in, but the company eventually scrapped them and decided to change its strategy entirely. It closed its lead generation process and launched a new strategic plan to accelerate its organic growth in the coming years and go it alone.
Telecom hired KPMG to seek debt financing to finance growth. The company is currently in talks with a dozen banks and debt funds. Obtaining financing between 70 and 90 million euros. “We are experiencing very strong growth and that is eating up a lot of cash. “We need financing to sustain this growth.” The group’s plans are to increase the number of customers from the current million to 1.5 million in 2024 and three million in 2027; and also increase revenue by 122% in two years to €270 million next year.
700 million network contract
Finetwork does not own its own networks but has opted for an operating model that involves using other groups’ networks through wholesale use agreements. The group is completing the sale of its small fiber network of 115,000 homes with the aim of getting rid of it this year and is negotiating a new wholesale agreement for network use with all major telcos.
Finetwork currently uses the Vodafone Spain network. however, the contract expires in April 2024. The company is negotiating with Vodafone for a possible renewal of the contract, but by confirming this it is putting pressure on its current partner. Telefónica is also negotiating with Orange and with other smaller operators that have their own fixed networks, such as Digi, Avatel or Onivia. “Our preference is to continue with Vodafone. Continuing with them means less effort for us. But we are ready to make this effort and we are ready to do it,” says the CEO, adding that the goal is to sign a network agreement within two months.
Finetwork estimates the value of this contract at €700 million over the next five years (at an annual rate of 140 million euros). Millionaire income of the telecommunications company that managed to close the deal to lease its network. This is one of the reasons why industry and financial sources say Zegona may be interested in acquiring Finetwork as a defensive move to avoid losing one of Vodafone. Major customers in Spain.
Network conditions
Currently the network agreement with Vodafone gives Finetwork ‘reseller’ status; This makes it a Vodafone distributor whose commercial tariffs it must agree on, even though it offers it under its own brand and owns its customers. . In fact, in the documents Zegona sent to the London Stock Exchange on the occasion of Vodafone Spain’s acquisition agreement, Finetwork was positioned as one of the brands that could grow in the Spanish market alongside Vodafone and as ‘low cost’. ‘ Lowi.
Sign up now to sign a new wholesale contract with Vodafone, Telefónica or Orange. Finetwork demands to stop being just a distributor and become a virtual mobile operator (OMV) is pure, has a strict lease agreement for the use of the infrastructure and complete freedom to set your own tariffs. “All companies accepted this,” Vilda emphasizes.
Additionally, to accommodate growth plans requires having access to a network of 15 to 20 million real estate units; this is a requirement that Telefónica and Orange already meet, and Finetwork must be agreed to complement the Vodafone deal footprint with additional deals.
Article regarding Orange-MM merger
The entire telecommunications industry is waiting to see when and how the merger of Orange Spain and MásMóvil can be realized, above all to create a new national giant. The European Commission believes that the operation could distort competition in the sector and has ‘stopped the clock’ on the merger analysis process to have all the time necessary to examine it in depth.
It is taken for granted that Brussels will impose conditions (remedies, Approving the operation (in economic and social jargon) forces companies to get rid of some assets to get regulatory approval. Finetwork has expressed interest in purchasing some of these excess assets, but not any of them. The group led by Óscar Vilda does not want to assume control of the fiber network that Orange-MásMóvil had to get rid of, but is only interested in participating in remedies that include access to wholesale network contracts with good conditions on the new group’s network. convenient. For this reason, Finetwork plans to add an escape clause to its contract with its new wholesale supplier It allows you to break or change the contract if you receive some of the solutions from Orange and MásMóvil.