New Capital Allocation Framework
Summary by AI BETAClose X
24 September 2026 LEI: 213800ASI1VZL2ED4S65
Zegona Communications plc
€400m Shareholder return, c.10% of Zegona’s market capitalisation1
Zegona Communications plc (“Zegona” or the “Company”, LSE: ZEG) today sets out its capital allocation framework and announces a €400m return to shareholders, comprising a €200m ordinary dividend and a €200m share buyback.
The framework establishes a clear and durable structure for investment in the business, balance sheet priorities and shareholder returns. It reflects the completion of the first phase of the Vodafone Spain transformation, the reduction in leverage and cost of debt achieved since acquisition, and the Board’s confidence in the growth of free cash flow from here.
Summary
|
Framework | |
|
Free Cash Flow |
Zegona intends to return all free cash flow to shareholders over time. |
|
Leverage |
Target net debt to EBITDAaL of 2.25x to 2.75x, near-term expectations are to maintain leverage around the lower end of this range. |
|
Ordinary dividend |
Introduction of a progressive ordinary dividend. The Board intends to declare an ordinary dividend of €200m in respect of the financial year ending 31 March 2027. |
|
Share buybacks |
In addition to the ordinary dividend the Board will actively consider share buybacks and where appropriate, special dividends. Zegona is today initiating a new share buyback programme of €200m. |
The capital allocation framework
1. Investment in the business
Investment in Vodafone Spain to drive future revenue and cash flow growth remains Zegona’s first capital allocation priority. Zegona will continue to invest in its customers, product innovation, network quality and operational efficiency, ensuring the business has the resources required to deliver sustainable long-term value creation.2
The completion of the PremiumFiber and FiberPass fibre joint ventures has fundamentally reshaped Vodafone Spain’s fixed-line economics, creating a simpler, more cash-generative business. As a result, Vodafone Spain is expected to self-fund its growth strategy from annual cash flow, enabling Zegona to deliver significant shareholder returns while continuing to invest in the business.
2. A strong and efficient balance sheet
Zegona is targeting leverage of 2.25x to 2.75x net debt to EBITDAaL. The range is intended to be enduring, providing investors with clarity on Zegona’s capital structure while preserving strategic flexibility. The Board believes this range strikes the right balance between financial flexibility, a prudent credit profile and returning capital to shareholders. Following the shareholder return announced today leverage is expected to remain around the lower end of this range.
Leverage has reduced from 3.1x at the acquisition of Vodafone Spain in May 2024 to 2.3x at 30 June 20263. In June 2026 Zegona refinanced all its existing senior secured notes and senior facilities, extending the maturity of its capital structure beyond five years and reducing its run rate annual cost of debt to c.€170m, compared with €294m two years ago.4
The significant reduction in leverage and cost of debt, together with the growing free cash flow generation of Vodafone Spain, has resulted in a much stronger and more efficient capital structure enabling ongoing capital returns to shareholders.
3. Shareholder returns
Ordinary dividend. Zegona is introducing an ordinary dividend and intends to grow it progressively, supported by growth in free cash flow and continued operating momentum. The ordinary dividend is intended to provide shareholders with a visible and growing base return and reflects the Board’s confidence in the sustainability of Vodafone Spain’s cash generation.
Share buybacks. In addition to the ordinary dividend, the Board expects share buybacks to be a key component of shareholder returns. The Board believes buybacks can be an attractive mechanism for returning capital particularly when Zegona’s shares are trading at a material discount to industry peers.
Flexibility. The Board will retain full flexibility over the form, mix and timing of shareholder returns beyond the progressive ordinary dividend. It will actively consider share buybacks and special dividends in future returns and will allocate capital in the way it believes creates maximum value for shareholders.
Initial returns under the new framework
Ordinary dividend
The Board intends to declare an ordinary dividend of €200m in respect of the financial year ending 31 March 2027. The dividend will be funded from Zegona free cash flow. The dividend will be subject to shareholder approval at the AGM and paid as a final dividend.
Share buyback programme
Zegona is today initiating a new share buyback programme of €200m5. The programme will be funded from Zegona’s free cash flow.
The Board believes that repurchasing Zegona shares at the current share price represents an attractive use of capital and an attractive return for shareholders. Zegona’s shares continue to trade at a material discount to the Board’s assessment of intrinsic value and to the Company’s European telecommunications peers, notwithstanding the operational progress delivered since the acquisition of Vodafone Spain.
The €200m share buyback programme announced on 27 November 2025 and commenced on 12 December 2025 is now complete. The buyback programme announced today is in addition to that programme.
The Buyback Programme will be carried out in accordance with the terms of the buyback agreement entered into with Canaccord Genuity Limited on 23 September 2026. This provides for on-market purchases, up to a total aggregate consideration of €200m (exclusive of expenses), to be carried out under the authorities granted at Zegona's 2026 AGM and any renewal of such authority which may be granted at the Company's 2027 AGM. All shares repurchased under the programme will be cancelled.
Eamonn O'Hare, Chairman and CEO of Zegona, commented, “Today’s announcement marks an important step in the evolution of Zegona. Since the acquisition of Vodafone Spain two years ago, we have built a stronger, simpler and more cash-generative business and are now in a position to set out a clear and disciplined framework for capital allocation. The significant reduction in leverage and cost of debt, together with the growing free cash flow, has resulted in a much stronger and more efficient capital structure. It is our ambition to return all of our free cash flow to shareholders as quickly and efficiently as possible to maximise long term value. Building on the €1.6bn of shareholder returns executed earlier this year, today’s announcement returns an additional c.10% of Zegona’s market capitalisation. The progressive dividend signals our confidence in the sustainability of our future cash flows, and the buyback is a message that we are determined to take action to close Zegona’s material valuation discount to industry peers.”
For further information please contact:
Investor enquiries: Media enquiries:
Alfonso Enríquez Jaime De Andres Tilly Abraham (Sodali & Co)
info@zegona.com jaime.andres@vodafone.com zegona@info.sodali.com
About Zegona
Zegona is publicly listed on the Main Market of the LSE. It was established in 2015 with the objective of investing in businesses in the European Telecommunications, Media and Technology sector and improving their performance to deliver attractive shareholder returns. Zegona is led by former Virgin Media executives Eamonn O'Hare and Robert Samuelson. In 2024, Zegona completed the acquisition of Vodafone Spain.
Notes
- Market Capitalisation based on 3-month volume weighted average price of Zegona.
- Consensus investment over the next 3-4 years is €2bn to €3bn.
- The leverage ratio is as presented in the investor presentations; Net debt divided by the trailing two quarters annualised Vodafone Spain EBITDAaL.
- Information on recent refinancing can be found in the RNS dated 26 June 2026 and titled “€3.7BN REFINANCING DELIVERS €60m SAVINGS” on the regulatory news section of zegona.com
- The Buyback Programme will be carried out in accordance with the terms of the buyback agreement with Canaccord Genuity Limited ("Canaccord"), details of which are set out below.
Information on the Buyback Programme
The sole purpose of the Buyback Programme is to reduce the share capital of Zegona and the Company therefore intends to cancel the ordinary shares of £0.01 each in the Company (the "Ordinary Shares") purchased pursuant to the Buyback Programme.
Purchases under the Buyback Programme will commence from the date of this announcement. The Buyback Programme shall terminate on the earlier to occur of: (i) the purchase by Canaccord of such maximum number of Ordinary Shares or of Ordinary Shares with a maximum aggregate consideration (excluding expenses) of €200 million; and (ii) the expiry of the Company's 2027 AGM (or the expiry of the Company's 2028 Annual General Meeting where the Company's on-market buyback authority is renewed).
The maximum number of Ordinary Shares which may be purchased is 33,894,569 (or if the purchases take place following the Company's 2027 AGM, the maximum amount permitted by the Company's on-market buyback authority in respect of any purchases following the date of grant).
The minimum purchase price which may be paid for any Ordinary Share is £0.01 (exclusive of expenses). The maximum purchase price (exclusive of expenses) which may be paid for any Ordinary Share shall not be more than the higher of: (a) an amount equal to 105% of the average of the middle market quotations of the Ordinary Shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the Ordinary Shares is contracted to be purchased; and (b) an amount equal to the higher of the last independent trade of an Ordinary Share and the highest current independent bid for an Ordinary Share as derived from the London Stock Exchange System SETS. Purchases of Ordinary Shares under the Buyback Programme are conditional upon compliance with all legal and regulatory requirements and, in particular, on Zegona having distributable reserves available for the purpose at the relevant time.
Under the Buyback Programme, Canaccord may, in accordance with certain parameters, independently of and without influence from Zegona, purchase Ordinary Shares on the London Stock Exchange from time to time and in its absolute discretion. During closed periods, in accordance with certain irrevocable instructions given to Canaccord in advance of the closed period, share purchases shall be carried out by Canaccord independently of and without influence from Zegona.
Whilst it is anticipated that the maximum daily volume of any purchases of Ordinary Shares pursuant to the Buyback Programme will not exceed 25% of the average daily volume of the Ordinary Shares traded on the London Stock Exchange for the 20 trading days preceding the date of the relevant purchase (as contemplated by Article 3(3) of the UK version of the MAR buy-back technical standards (Commission Delegated Regulation (EU) 2016/1052) as incorporated into UK domestic law by virtue of the European Union (Withdrawal) Act 2018) (the "MAR Buy-Back Regulation")). Where there is general illiquidity in the trading of the Company's Ordinary Shares, purchases may be made in excess of the aforementioned volume limits and, in such circumstances, the Company will not be able to rely on the safe harbour set out in the MAR Buy-Back Regulation.
All purchases of Ordinary Shares under the Buyback Programme will be carried out on the London Stock Exchange and Canaccord will purchase any Ordinary Shares as principal and simultaneously be deemed to execute on-market sales of any Ordinary Shares so purchased to the Company in accordance with the buyback agreement on a 'riskless principal' basis.
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