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Euskaltel is underperforming, says shareholder Zegona

Spanish regional cable operator Euskaltel has failed to take sufficient action to improve its performance since acquiring Asturias operator Telecable from UK-based owner Zegona Communications, according to the latter’s assessment of the company.

Publishing its annual report, Zegona said that it was “disappointed” by the decline in Euskaltel’s share price since the closing of the sale of Telecable, which gave Zegona a 15% stake in the combined operator and a seat on the board for Zegona COO Robert Samuelson.

Zegona said that Euskaltel’s performance falling short had resulted in a €41.5 million decline in the value of its investment. It said that Samuleson had been “actively involved” in Euskaltel’s board and committees but that it was “disappointed that the extent of this input has not resulted in the effective action we believe is required within the Euskaltel business”.

Zegona said it would “continue to monitor” the situation and that Samuelson would “seek to support performance improvement through his position on Euskaltel’s board and strategy committee”.

The company said it believed there is an opportunity to generate “significant additional value” from the stake, with Euskaltel trading at a “very significant” discount to industry peers.

In addition to Samuelson, the acquisition of Telecable gave Zegona the right to nominate an independent director, Jon James, the CEO of Tele2 Netherlands.

Zegona said it was continuing to “evaluate new acquisition opportunities” in the telecom and media space.

Basque Country-based Euskaltel acquired Telecable last year, having earlier acquired Galicia-region operator R. It has also begun offering services in the Navarre region through an agreement with Orange and has unveiled ambitious plans to expand its presence in other contiguous regions in northern Spain.