Zegona Communications (ZEG) Unveils €1.8bn Capital Return and 69% Share Reduction After Vodafone Spain FibreCo Deals

Published: 27 November 2025 – London/Madrid

Zegona Communications plc (LON: ZEG), the London‑listed owner of Vodafone Spain, has announced a landmark €1.8bn capital allocation plan that combines a huge cash return to shareholders with a sharp reduction in leverage and a drastic cut in its share count. ^[1]

The proposal, unveiled via a Regulatory News Service (RNS) announcement this morning, will see €1.6bn returned to shareholders through a special dividend and share buyback, while €200m is earmarked to pay down debt, funded entirely by proceeds from Zegona’s recently signed fibre joint‑venture (“FibreCo”) transactions in Spain. ^[2]

Executive chair and CEO Eamonn O’Hare described the move as “another major milestone” in the transformation of Vodafone Spain and Zegona, noting that in just 18 months since acquiring the Spanish business the group has executed two major FibreCo deals, completed the shift to a 100% fibre‑to‑the‑home (FTTH) network and unlocked €1.8bn of proceeds. ^[3]

Share price near record highs as market digests payout plan

Investors have responded positively. By late morning on 27 November 2025, Zegona Communications shares were trading around 1,385–1,390p, up roughly 2–3% on the day and close to their 52‑week high of 1,425p. The stock has climbed more than 280% over the past year, giving the company a market capitalisation of around £10.5bn. ^[4]

Alliance News, via Shares Magazine, reported that the shares were up about 1.5% in early trading following the announcement, reinforcing the impression that the market views the capital return as value‑accretive and well‑flagged after months of speculation about a “large shareholder payout”. ^[5]

Inside Zegona’s €1.8bn capital allocation plan

1. €1.4bn special dividend – effectively repaying the Vodafone loan

The headline item is a €1.4bn special dividend, equivalent to approximately £1.62 per Zegona ordinary share, based on an assumed EUR/GBP rate of 0.87. ^[6]

That special dividend has two distinct components:

€975m will be paid to EJLSHM Funding Limited, the vehicle through which Vodafone Group originally financed part of Zegona’s acquisition of Vodafone Spain via redeemable preference shares. This covers €900m of principal plus €75m of accrued return, allowing Zegona to settle the Vodafone financing in full. ^[7]
The remaining €440m will be distributed pro rata to Zegona’s other ordinary shareholders, also equating to about £1.62 per share for those investors. ^[8]

Spanish business media, including Cinco Días, Bolsamanía and Economía Digital, highlight that this structure effectively repays the £975m loan Vodafone extended to Zegona when it sold its Spanish arm in 2024, while simultaneously handing a sizeable cash windfall to existing shareholders. ^[9]

2. 69% reduction in share count and €200m share buyback

Once the Vodafone financing is repaid, Zegona will be able to cancel the 523m ordinary shares held by EJLSHM, shrinking the number of ordinary shares in issue from about 759m to 236m – a 69% reduction in the share count. ^[10]

After this cancellation, Zegona plans to launch a €200m on‑market share buyback programme, executed under an agreement with Canaccord Genuity and funded from the same pool of disposal proceeds. ^[11]

Management argues that buying back stock after cutting the share count so dramatically should magnify the impact on earnings per share and intrinsic value per share over time, assuming operating performance holds up. Advanced Television and several Spanish outlets note that Zegona may even start the early phase of this buyback using current balance‑sheet resources if the cancellation of EJLSHM’s shares is completed before the FiberPass transaction closes. ^[12]

3. €200m debt reduction, lower leverage and falling interest costs

The remaining €200m of the €1.8bn proceeds will go directly to reducing net debt, bringing it down to about €3.4bn and lowering leverage to 2.58x L2QA EBITDAaL, compared with a level above 3x at the time of the Vodafone Spain acquisition. ^[13]

This is not just a cosmetic change. Zegona points out that its annual interest costs have already fallen from roughly €294m at the time of the 2024 deal to around €235m following a series of refinancings this year. On the new, lower net debt balance, and at current bond yields, the company believes annual interest expense can drop well below €200m, bringing it closer to its stated leverage target of 1.5x–2.0x. ^[14]

For an asset‑heavy telecom operator in a competitive market like Spain, this extra financial headroom – less debt, lower interest costs – is a meaningful strategic cushion.

How the FibreCo deals are funding the payout

The war chest fueling this capital return comes from two landmark FibreCo transactions in Spain that together unlock €1.8bn of upfront cash for Vodafone Spain, now part of Zegona.

PremiumFiber: GIC joins Vodafone Spain and MasOrange

In August, Zegona announced that Singapore sovereign wealth fund GIC would take a c.25% stake in PremiumFiber, a new fibre network JV combining the fixed assets of Vodafone Spain and MasOrange. After the deal, MasOrange holds 58%, Vodafone Spain 17% and GIC 25%. ^[15]

PremiumFiber’s network covers around 12 million premises and provides FTTH services to approximately 4.5 million customers, making it one of the largest and most advanced fibre platforms in Europe. The transaction is expected to generate €1.4bn of upfront proceeds for Vodafone Spain, which flows through to Zegona. ^[16]

FiberPass: AXA IM Alts buys 40% stake

Earlier this week, Zegona confirmed that AXA IM Alts has agreed to acquire a 40% stake in FiberPass, the fibre joint‑venture between Vodafone Spain and Telefónica España. When FiberPass began operations in March 2025, Telefónica owned 63% and Vodafone Spain 37%. Under the new agreement, AXA will hold 40%, Telefónica 55% and Vodafone Spain 5%. ^[17]

The deal is expected to generate €400m of upfront proceeds for Vodafone Spain, with Telefónica also receiving €100m for part of its stake, valuing FiberPass at about €1.5bn according to recent earnings coverage. ^[18]

Combined proceeds: €1.8bn and a fully‑fibre Vodafone Spain

Taken together, the PremiumFiber and FiberPass deals deliver approximately €1.8bn of upfront cash to Vodafone Spain, which Zegona is now recycling into dividends, buybacks and debt reduction. ^[19]

From a strategic standpoint, O’Hare has previously stressed that the combination of the two FibreCos gives Vodafone Spain guaranteed access to a national, all‑fibre fixed network with attractive economics, while shifting much of the capital intensity of network ownership off Zegona’s own balance sheet. ^[20]

What today’s news means for Zegona shareholders

Massive cash return plus a smaller share base

For ordinary shareholders, the near‑term picture looks straightforward:

Cash in: Around £1.62 per share from the special dividend (before tax), representing a return of the capital raised for the Vodafone Spain acquisition plus a modest uplift, according to the RNS. ^[21]
Fewer shares outstanding: A 69% reduction in the ordinary share count once the EJLSHM‑held shares are cancelled. ^[22]
Ongoing buyback: Up to €200m of stock repurchased on the market after the share cancellation, which, all else equal, should be supportive for earnings per share and net asset value per share over time. ^[23]

In economic terms, Zegona is shrinking its equity and debt simultaneously: returning most of the €1.8bn to investors, clearing the Vodafone preference share financing, and trimming the group’s leverage. That combination can be powerful for long‑term holders if Vodafone Spain’s operating performance continues to improve.

Cleaner balance sheet and simplified capital structure

Today’s moves also simplify Zegona’s capital structure:

The Vodafone financing via EJLSHM is repaid and unwound.
The large block of EJLSHM‑held ordinary shares is cancelled, reducing overhang and concentrating ownership among public shareholders. ^[24]
Net debt falls and the firm continues to migrate towards a “covenant‑lite” debt structure, giving management more flexibility on capital returns and strategic options. ^[25]

Spanish press has emphasised that the plan will also significantly reduce Zegona’s market capitalisation simply because there will be far fewer shares after the restructuring, even though the underlying enterprise value (equity plus debt) may not change as dramatically. ^[26]

Recent earnings momentum and analyst sentiment

Today’s capital return announcement comes on the heels of strong recent newsflow:

Earlier this week, Zegona reported robust second‑quarter results, with positive net customer additions and confirmation of the FiberPass stake sale, highlighting improving fundamentals at Vodafone Spain despite a competitive market. ^[27]
The group delivered an interim financial report and a Vodafone Spain half‑year presentation on 25 November 2025, giving investors more visibility on revenue trends, margins and the impact of fibre monetisation. ^[28]

On the analyst side, interest remains strong:

Berenberg Bank recently reiterated its “Buy” recommendation on Zegona (traded in the U.S. as ZEGLF), according to Fintel data published today, following up on a note originally dated 25 November. ^[29]
Earlier this month, Canaccord Genuity also reaffirmed a Buy rating on the stock. ^[30]

While target prices vary by broker and are subject to frequent revision, the broad message from the sell‑side has been that the FibreCo monetisations and ensuing capital return significantly de‑risk Zegona’s equity story, even as the Spanish telecom market remains fiercely competitive.

Key dates and next steps to watch

Investors following Zegona Communications (ZEG) should keep an eye on several upcoming milestones:

Shareholder circular & general meeting
- Zegona plans to publish a circular “shortly” and convene a general meeting seeking approval for the capital allocation plan, including scrapping the current requirement for six months’ notice to settle the Vodafone financing. ^[31]
Closing of PremiumFiber transaction (GIC investment)
- The PremiumFiber deal, which underpins €1.4bn of the proceeds, is expected to complete by the end of 2025, subject to regulatory approvals. ^[32]
Special dividend payment
- Zegona intends to execute the special dividend once the PremiumFiber proceeds have been received, meaning the payout is likely to fall soon after that closing, assuming shareholder approval. ^[33]
Closing of FiberPass transaction (AXA IM Alts stake)
- The FiberPass deal, which completes the €1.8bn package, is expected to close in the first quarter of 2026. ^[34]
Launch and pace of the €200m buyback
- The buyback will start after the cancellation of EJLSHM’s shares; if that happens before FiberPass closes, Zegona may initially fund repurchases from its existing balance sheet. ^[35]

Bottom line: a pivotal moment for Zegona and Vodafone Spain

In just a year and a half since taking control of Vodafone Spain, Zegona has:

Completed its shift to a national FTTH‑based network,
Monetised stakes in two major fibre platforms for €1.8bn in upfront cash, and
Announced one of the largest capital‑return programmes currently seen in European telecoms, combining a double‑digit special dividend yield with aggressive share count reduction and meaningful deleveraging. ^[36]

For shareholders, today’s news crystallises much of the value embedded in those network transactions and sets the stage for a leaner, less leveraged, and more shareholder‑focused Zegona Communications.

As always, anyone considering an investment should treat this as information, not financial advice, and should review Zegona’s official filings, presentations and independent research – and consider their own risk tolerance – before making decisions.

References

Workday (WDAY) Stock: What to Watch Before the November 28, 2025 Open After Q3 Beat, AI Deals and Analyst Downgrades

Coinbase (COIN) Stock Outlook Before Friday’s Market Open on November 28, 2025

Netflix Stock (NFLX) Before Market Open on November 28, 2025: What Investors Need to Know

Eli Lilly (LLY) Stock Outlook Before Market Open on November 28, 2025: Trillion‑Dollar Pharma in Focus

Strategy Inc (MSTR) Stock Outlook: Bitcoin Proxy Faces MSCI Index Risk Before Market Opens on November 28, 2025