UK-based investment vehicle Zegona, owner of regional Spanish broadband operator Telecable Asturias, and Basque cable operator Euskaltel, owner of Galician cable provider R, are close to reaching a merger deal that would create a powerful regional operator in the north of Spain, according to unnamed sources cited by business daily Expansion. The resulting entity would have potential annual revenues of around EUR 750 million and an EBITDA of EUR 360 million, although the valuation of Telecable has been the main stumbling block in the talks held in recent weeks, said the sources.
Euskaltel finalised the acquisition of Galician cable provider R for a total of EUR 1.19 billion in November 2015, saying at the time that it would allow it to compete better in its territories, while Zegona has expressed a continued interest in investing across the broader European TMT landscape even though it failed in its attempt to acquire Spain’s fourth largest operator Yoigo last year.
The report adds that the financial strength of the combined group, with a large cash flow and little need to invest in fixed networks, would allow it to expand into neighbouring regions in northern Spain, such as Cantabria, Navarra, La Rioja and Leon.
