The Government authorizes the purchase of Vodafone’s business in Spain by the British fund Zegona

May 14. () –

CCOO and UGT expressed their concern about the possibility that this operation implies layoffs in the company

14 ()

This Tuesday, the Council of Ministers authorized the purchase of Vodafone’s business in Spain by the British fund Zegona, an operation valued at 5,000 million euros and which was announced at the end of last October, but which needed the approval of the Executive. as reported by the head of the Digital Transformation and Public Service portfolio, José Luis Escrivá.

“As in previous operations of this nature, which have recently materialized, the authorized company has committed to a medium-term investment plan in the field of telecommunications, both in the fixed and mobile fields, and, in addition, to maintain high financial solvency at all times,” Escrivá assured when asked about this authorization.

Through a statement, the Ministry for Digital Transformation has reported that Zegona has presented various commitments in the authorization process through a strategic and financial plan.

“Specifically, to guarantee the continuity of the service and contemplate future investments, mainly in mobile coverage with 5G technology, as well as to adopt measures that guarantee financial solvency,” added the portfolio led by Escrivá.

According to the Government, these investments – especially those aimed at the development of 5G – will allow Spain to consolidate its position “at the European forefront in connectivity”, although it has not specified their amount.

Zegona has also committed to maintaining relevant contracts with the General State Administration and stability in the company’s strategic assets.

The Government’s authorization occurred after last week the Foreign Investment Board, belonging to the Ministry of Economy, Commerce and Business, issued a favorable report after analyzing the operation.

Along these lines, the Ministry for Digital Transformation, through the Secretary of State for Telecommunications and Digital Infrastructure, has authorized Zegona to take control over the radio spectrum concessions held by Vodafone Spain.

In addition to the approval of the Executive, the transaction had also been previously authorized by the National Commission of Markets and Competition (CNMC), by the shareholders of Zegona and also passed the procedure related to European Union regulations ( EU) on “foreign subsidies that distort the internal market”.

In this way, the deadlines established by Zegona, whose objective was to close the operation in the first half of this year, are met.

POSSIBLE LAYOUTS

In this context, among the commitments acquired by Zegona and transmitted by the Government, those related to the maintenance of employment are not mentioned.

Precisely, last week the CCOO and UGT unions conveyed to the Government their concern about the possibility of layoffs at Vodafone due to the sale to Zegona.

“To the collective dismissal process already begun at Avatel, we are sure that others will be added shortly, especially if the rumors about Zegona are confirmed, in which a progressive dismantling of the company is clearly proposed, with the repercussions that would have on an already very depleted workforce,” highlighted the federal secretary of the Communications and Culture sector of UGT, José Alfredo Mesa, in a letter addressed to the Secretary of State for Telecommunications and Digital Infrastructures, María González Veracruz.

For its part, CCOO wrote a letter addressed to both Escrivá and the head of Labor and Social Economy, Yolanda Díaz, to express its “enormous concern” about the possibility of layoffs in the telecom company.

“We will not accept, under any circumstances, that this operation could lead to the destruction of jobs due to the dramatic consequences that such a situation would have on workers and their families,” CCOO warned.

“Our concern is based on a public document from the Zegona group where it qualifies unions as a risk for its actions in Spain and where it also talks about savings in employment costs. As well as many other possible initiatives regarding network deployment or elimination of this,” CCOO added.

COST REDUCTION PLAN

According to the information that Zegona has been publishing, its cost reduction plan for Vodafone’s business in Spain raises the possibility of layoffs at the operator and also the closure of stores with “poor performance.”

Regarding potential layoffs, the company has raised the possibility of applying a “specific program” to reduce staff so that personnel costs drop from the 7.1% of Vodafone’s business income in Spain that they currently represent.

In relation to the closure of stores, Zegona has pointed out that the cost of attracting customers at Vodafone was around 339 euros in the previous fiscal year, so it considers that to reduce that figure there are various alternatives, which go through the closure of physical points of sale with “low performance” and the promotion of digital channels for relationships with users.

Another of the measures contemplated in Zegona’s plan is the renegotiation of wholesale fixed network contracts with Telefónica, Orange and MásMóvil.

The fund strategy led by Eamonn O’Hare also refers to “bad debts”, for which it is studying outsourcing an agency specialized in this and “implementing greater controls” to reduce the percentage of this type of debt to 0.89 % of turnover.

Another element of the roadmap to reduce costs is the renegotiation of television content agreements and using the Lowi brand to expand the subscriber base and lower the cost of television content from 9.6 euros per customer.

In addition, it proposes reducing annual spending on information technologies, which is currently 102 million euros annually.

Other elements that the British fund has identified to rationalize costs in Vodafone Spain have to do with the cancellation of “unproductive technological projects” and the replacement of some “high-cost services” that the company receives.