Madrid, June 24 (EFECOM).- The credit risk measurement agency Moody’s has assigned for the first time to Zegona its rating, of Ba3 (just three steps away from exiting the junk bond), with a positive outlook, to the British fund Zegona, that Vodafone Spain acquired.
As reported on Monday by the credit rating agency, it has also assigned a Ba3 rating to the senior secured term loan B proposed by Zegona HoldCo Limited and Zegona Finance maturing in 2029.
The rating assignments follow Zegona Communications’ €5 billion acquisition of Vodafone Spain.
The transaction will be financed with a combination of €3.9 billion of debt (including up to €500 million of Term Loan A and €3.4 billion of Term Loan B and other secured debt) and €1.2 billion of equity.
Moody’s has said that Zegona’s rating, for the first time, with a Ba3 note balances its strong position in the Spanish market with the execution risks associated “with its ambitious plans” for recovery and cost and investment efficiency.
The risk measurement agency expects the company’s credit metrics to improve over time.
Zegona is the third telecommunications operator in Spain, with a market share, measured in subscribers, of 22% in mobile telephony and 16% in fixed telephony, after MasOrange (43% in mobile and 40% in fixed telephony) and Telefónica ( 27% on mobile and 32% on landline).
The company’s revenue decreased from €4.2 billion in the trailing twelve months ending March 2022 to €3.9 billion in the trailing twelve months ending February 2024, due to the declining customer base at Vodafone (its premium brand), partially offset by price increases and some customer gains in the low-cost brand Lowi.
Moody’s expects Zegona’s revenue growth in the Spanish market to be flat over the next two to three years.
Likewise, he points out that he expects that Zegona’s cost savings plan, which includes the reduction of the workforce, will allow the company to achieve savings in material costs and capital expenditures of around €160 million annually by the third year after of its closure.
However, it expects the company to incur around €160 million in restructuring costs to achieve those savings. EFECOM
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