Euskaltel could sell its cable network to boost Virgin Telco

This was revealed today by Expansión, where Euskaltel would be seeking to have resources to carry out its expansion at the national level with Virgin Telco, which is currently using the orange fiber network beyond the networks of one’s own Euskaltel, Telecable and R.

Selling the Cable Network to Power FTTH and Virgin Marketing

The cable network, although it has been deployed for more than a decade, is becoming outdated in the face of the broad advantages offered by the FTTH that have been deploying national operators in Spain for more than five years. This has led cable companies to lose some share in their territories, and therefore the sale of their networks could be a solution. In addition, they could have more money to finance Virgin Telco’s marketing nationwide, as some Euskaltel cable rates are lagging somewhat behind the competition in aspects such as symmetry.

Euskaltel has hired the business bank Lazard to, among other possible operations, carry out the sale of its cable network. The price at which they could sell their network is difficult to estimate, since the buyer has to assess aspects such as the rental period and the price that Euskaltel is willing to pay for that rental. The forks could go from 600 to 1,700 million euros, depending on whether the price for access is paid at 8 or 18 euros. It could also be somewhere in between.

There could be political pressure for the sale not to go ahead

Already in 2019, the CEO of Zegona, Eamonn O’Hare, stated that the sale of the cable network was a possibility that he affirmed that the Euskaltel board and executives were surely looking at it as a formula to create value in the following months. This sparked a great controversy in the Basque Country, where Bildu pressed the PNV so that this network would not be sold. Thus, a motion was approved in the Basque Parliament so that the Government could enter the capital of the company to maintain the roots that the operator has there and prevent it from being sold to foreign capital.

Thus, last year the CEO of the company, José Miguel García, also ruled out that the put option was on the table at that time, although he did not rule out putting the idea back on the table in the future. At the moment they are exploring the possibility, but there is no decision on it. Vodafone had last year on the table the option of sell your network assets to generate more value, but they finally discarded it, not even starting the process of active sale of a network valued at around 1,200 million euros last year.

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