Zegona has not yet formally become a shareholder in Vodafone Spain. The procedures to obtain authorization from the Government based on the so-called ‘anti-opas shield’ are lengthening. But there is already a certain increase in the commercial aggressiveness of the company, still dependent on the London-based group. In recent months, the incorporation of television in Lowi has been completed by including Amazon Prime in its rates, the launch of discounted products in convergent fiber and mobile packages, the renegotiation of some of the contracts with audiovisual providers or the inclusion of football through a distribution agreement with Dazn. The conversations with the Executive are being held and there is no deadline, after the first one, set at the end of March, proposed by the manager led by Eamonn O’Hare, has been missed.
Five and a half months have passed since the acquisition of 100% of the Spanish subsidiary for 5,000 million was announced. Today there has not yet been a formal ‘takeover’ but, unlike the case of Orange-Másmóvil which were rivals, in this transaction the buyer has been able to get closer in the day-to-day life of this ‘interim period’. One of Zegona’s priorities was Lowi. “There is great potential,” he said in the brochure presented to the regulator. In recent weeks, two steps have been taken to press the accelerator in this ‘low cost’ segment where the competition has not stopped heating up during this time.
The first measure was to incorporate television, even in a tangential way. It incorporated free months of Amazon Prime Video – as Finetwork would also do – to several of its convergent rates at no additional cost. The second step has been to further improve the rates not in price but by incorporating more gigabytes of data among the cheapest, which practically equals them with Digi, the great rival to beat in the sector in this ‘low cost’ segment.
Despite this acceleration in Lowi, the aggressiveness in its main brand is not going to reduce. And proof of this has been the launch this week of a product under its Yu brand that involves lowering the 50 euro barrier including the most economical Netflix service. This places it below Yoigo – Másmóvil’s most premium brand -, at a level more or less similar to that of Jazztel with its TV and somewhat above Pepephone. But it must be taken into account that these last two are not the first brands of the new Masorange. All analysts and competitors expected that toughness would increase due to the need to return to revenue growth – in the last quarter of 2023 they grew by just 0.2%.
The decision to abandon football due to the high cost was also indicated, although less obviously, in that same brochure that marks the pause that Zegona will continue with the company. In that document it said that there was a risk of increasing customer rotation (known in the jargon as ‘churn’) for, among other reasons, that the competition offers “content or features that Vodafone Spain does not offer, for example, sports packages live for pay TV, including football.” Last February, weeks of negotiations were completed with Dazn, to incorporate it into their convergent packages, and with LaLiga to once again offer the entire ‘king sport’ in bars and restaurants – from where it left in the summer of 2022 -.
Among the objectives that Zegona set in that document was also the renegotiation of contracts with audiovisual suppliers. Vodafone had until now opted to be the largest aggregator of movies and series. And it had exclusive agreements in Spain with HBO Max and Filmin. The first has been renewed but it has been done without that first, which would mean a lower cost for the company’s coffers but opening the possibility of other rivals incorporating it – Movistar and Orange will have it with the low relaunch of the Max brand in May -. In the case of the Spanish streaming platform there has not yet been any public movement.
Conversations with the Government
While all these movements are happening – those that have not occurred are those that have to do with the staff, the internal organization and the organizational and managerial structure, which will be addressed after the ‘takeover’ of the fund -, the conversations with the Ministry of Digital Transition remains at the highest level. Initially, the manager had set the goal of having everything closed by the end of March to operate independently of the British group – although with its support with general services – from the month of April. But this has not happened, given the priority of authorization for the Orange-Másmóvil merger, and they prefer not to add new calendars. Of course, everything indicates that it should be completed before mid-May.
The minister of the sector, José Luis Escrivá, wanted to leave his mark on the two transactions in the telecommunications sector. In Orange-Másmóvil he staged an authorization in which an investment plan of 4,000 million euros in three years was agreed – a figure very similar to the current joint Capex of both groups – and some “sufficient employment commitments.” In these weeks, meetings are taking place and it is foreseeable that some measure of this type will be requested, also linked to the expansion of networks or staff. The future owner already spoke of “selective exits.”
