Bankinter| The company will present a redundancy plan for up to 5,000 employees in Telefónica Spain. In addition, there is talk in the media of a possible interest of a consortium led by RRJ in buying Vodafone Spain.
As for the redundancy programme, Telefónica will present the programme to the unions before Investor’s Day on 8 November. It expects around 2,500 employees to take redundancy.
Although unconfirmed, media reports anticipate a possible bid by a consortium led by private equity firm RRJ for Vodafone Spain.
The tentative assessment mentioned is €5 billion. RRJ is already a partner of Vodafone with a 3% stake in Vantage, Vodafone’s communications tower subsidiary.
Opinion of the analysis team: A new measure to gain productivity in the Spanish subsidiary, the most important of the group (27% of revenues and 30% of OIBDA) and with a larger workforce than its competitors. In 2024, the copper network will be shut down, which will allow the closure of a hundred sites and the reduction of employees.
After several years of disappointing performance (declining revenues, loss of market share and profitability below the group average), Vodafone is considering various strategic options for its Spanish subsidiary. Among these options is a sale of the subsidiary to focus on its core markets. Vodafone Spain accounts for 9% of Group Revenues (€3,907m in 2023 ended 31 March) and 6.5% of its EBITDA (€947m). The EBITDA margin in Spain (24.2%) is lower than the total (32.1%). The aforementioned valuation of €5,000m would imply an EV/EBITDA 2023 of 5.3x vs. 3.8x Telefónica, which highlights Telefónica’s attractive multiples. Telefónica’s profitability in Spain is also higher than Vodafone’s: M. EBITDA of 36.0% vs. 24.2%.
