Telecable posts solid results, Zegona looking for investment opportunities

Spanish regional cable operator Telecable has posted solid first quarter results, with revenue boosted by a price increase in January.

Telecable’s first quarter revenues rose by 5.7% to €34.9 million, the highest revenue growth for the first quarter in six years. EIBTDA rose by 3.7% to €16.6 million, while cash flow rise by 11.1$% to €8.8 million.

The revenue increase was boosted by a €2 price rise for enhanced product offers that took place in January. Telecable also reported solid growth in the business-to-business segment.

Telecable’s owner, UK-based Zegona Communications, said the operator was on track to deliver full-year mid-single digital revenue growth and double-digit cash-flow growth this year.

Eamonn O’Hare, Zegona’s chairman and CEO said: “Telecable has a clear strategy that is delivering results and its first quarter performance reflects our focus on fundamentally improving cash flows. We are encouraged by the continuing growth in the business, underpinned by the recent consumer price rise and progress in growing the mobile and business divisions. This performance, together with further evidence of price repair in the Spanish telecoms market and the improving economic environment, gives us confidence that Telecable will continue to deliver strong growth across its key financial metrics in 2016.”

The results follow Zegona’s failure to secure a deal to acquire Spanish mobile operator Yoigo after being outbid by local MVNO MásMóvil.

Zegona said that it had now terminated all discussions on Yoigo and would look at other opportunities. The company said that it had ultimately not been able to strike acceptable deals with minority shareholders and noted that MásMóvil had agreed a deal giving Yoigo an equity value at least 35% higher than its own. The company said it had seen significant synergies for the business with Telecable but that Yoigo also faced a number of challenges. It said that was “only prepared to acquire Yoigo at the right price given our disciplined valuation approach and focus on shareholder returns” and that, while the MásMóvil deal was dependent on the latter securing debt and equity financing, it would now disengage to focus on other opportunities.

Zegona noted that Telecable remained well-ppositioned for further industry consolidation in Spain.

“As we look out across the European TMT landscape, we see many attractive investment opportunities. We will continue to evaluate those transactions which can be executed efficiently, enhance shareholder returns and which satisfy our disciplined financial criteria,” said O’Hare.