24th Sep 2026 09:59
(Alliance News) - Zegona Communications PLC on Thursday said it will return EUR400 million to shareholders under a new capital allocation framework, raising total returns to shareholders since buying Vodafone Spain to EUR2 billion.
The London-based investor in European telecommunications and media companies said it aims to return all free cash flow to shareholders over time, reflecting increased cash generation following its acquisition of Vodafone Espana SA from Vodafone Group PLC in May 2024.
Zegona said it targets net debt to earnings before interest, tax, depreciation and amortisation, after leases, of between 2.25 and 2.75 times. Leverage fell to 2.3 times at June 30 from 3.1 times when it acquired Vodafone Espana.
Following the completion of two fibre network joint ventures, Vodafone Espana is expected to be able to fund its own growth strategy, allowing Zegona to return cash to shareholders.
Zegona said it will pay EUR200.0 million through a final dividend for the financial year ending March 31. The newly introduced ordinary dividend is intended to grow progressively, Zegona said.
Additionally, Zegona began on Thursday a EUR200 million share buyback programme.
The company said it will consider further share buybacks and special dividends in the future.
Chair & Chief Executive Officer Eamonn O'Hare said: "Building on the EUR1.6 billion of shareholder returns executed earlier this year, today’s announcement returns an additional around 10% of Zegona’s market capitalisation. The progressive dividend signals our confidence in the sustainability of our future cash flows, and the buyback is a message that we are determined to take action to close Zegona’s material valuation discount to industry peers."
Zegona paid a EUR1.4 billion special dividend late last year, followed by a EUR200 million share buyback that it started in December.
Analysts at Berenberg noted there could be scope for larger payouts, forecasting Zegona's leverage to fall below its target range from 2028.
"We may be too cautious, noting that Ebitda after leases growth means that gearing falls to 2.0-2.2 times from 2028 to 2030 in our forecasts, below the target range of 2.25-2.75 times, which could give management more firepower," they said.
The analysts also remain cautious about revenue forecasts, highlighting price competition in Spain and maintain the assumption that consolidation could be complicated. However, they note service revenue trends look "solid" and "management has more options on costs if needed."
Zegona shares were down 4.0% to 1,700.00 on Thursday morning in London for a market capitalisation of GBP3.84 billion.
By Camilla Borri, Alliance News reporter
Comments and questions to [email protected]
Copyright 2026 Alliance News Ltd. All Rights Reserved.
Related Shares:
Zegona ComVodafone