Cable and telecom investor Zegona Communications has given an upbeat assessment of prospects for Spanish cable operator Euskaltel, in which it is now the leading shareholder, following a restructuring of the management team under new CEO José Miguel García last week.
Zegona said that the integration of three operating companies – Basque Country-based Euskaltel, Asturias’ Telecable and Galicia-based R – into a single business was designed to simplify operatioins and reduce costs. The new management cut the senior executive team’s headcount by 25%.
Garcâ has also moved to create a single technical platform, integrating the sales strategies of the three brands.
Zegona hailed Euskaltel’s launch of a new mobile offering in partnership with Samsung and the harmonisation of product across the three brands.
Zegona said that “winning a small share” of the national market outside Euskaltel’s northern Spanish home would be “transformative” for the company as it ramps up its national expansion plans.
Eamonn O’Hare, CEO of Zegona, said: “With José Miguel now running the Euskaltel business and our greater influence on the board, we are confident the company’s new direction will drive value for Zegona shareholders. In addition, I have no doubt our investors will benefit from incremental gains as the market reflects on Zegona’s recent positive broker coverage and addresses the almost 30% upside to our look-through value.”
Analysts at Barclays said that Zegona’s shares were currently trading at a 25% discount to Euskaltel’s fair value. Barclays set a price target of €8.50 for Eusaltel shares, with a possible upside case of €10 a share in the case of accelerated national expansion and recovery in its core markets.
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10th December 2019