Finetwork Shareholders Oppose Vodafone Spain's Control Takeover

A majority group of current Finetwork shareholders intends to challenge Vodafone Spain's takeover of the company, a measure included in the restructuring plan proposed by the telecom owned by Zegona due to the accumulated debts of the Alicante-based company, according to sources familiar with the situation who spoke to Europa Press.

The group of owners planning to contest the absorption of Finetwork believes that the company's valuation and, therefore, the debt-for-equity swap should be reviewed or estimated by 'someone independent', as well as the amount of the claimable debt.

In this regard, Finetwork's current shareholders include the president and company founder, Pascual Pérez, who holds just under 50%, followed by the 'family office' Kai Capital—which injected 20 million into the company just over a year ago—and a group of minority shareholders with smaller stakes.

Regarding the intentions of the Finetwork shareholders group, Vodafone Spain states they are 'calm' because, they argue, they have followed all established judicial and legal procedures and that the Alicante telecom is within its rights to appeal.

It should be noted that at the beginning of last September, the Commercial Court No. 1 of Alicante supported the restructuring plan proposed by Vodafone Spain for Finetwork due to the accumulated debts of the latter, a decision that means the telecom owned by the British investment firm Zegona will eventually take control of the Alicante operator.

The court's decision states that the restructuring plan proposed by Vodafone Spain includes several structural measures affecting both the composition and capital of Wewi Mobile, Finetwork's parent company.

In this line, two measures stand out, one aimed at a capital increase through the compensation of credits amounting to 50 million euros, intended to capitalize part of the debt Finetwork owes to Vodafone (with the issuance of new shares in favor of the latter).

The second is the removal of the current board of directors of Wewi Mobile and the appointment of a new three-member board appointed by Vodafone once the capital increase is executed.

Additionally, Vodafone's plan includes a maximum additional financing line of 20 million euros.

The court's resolution also highlights that the 'most controversial issue' of the plan is related to the suspensive clauses and administrative authorizations, specifically from the National Commission of Markets and Competition (CNMC) and the Foreign Investment Board (due to Zegona being a British firm and Vodafone operating in a strategic sector like telecommunications).

In this regard, the effectiveness of measures such as corporate restructuring, credit capitalization, and Vodafone's takeover is subject to obtaining approval from the CNMC and the Foreign Investment Board before December 31 of this year.

On the one hand, Vodafone has already obtained authorization from the Foreign Investment Board, while the CNMC is already analyzing the operation, and the process is in the first phase.

Should Vodafone Spain ultimately take control of Finetwork—which has around one million active services—there are two possibilities: integrate it into its operations or sell it.

Regarding the latter option, it should be remembered that at the beginning of last July, the Spanish fund Asterion Industrial Partners expressed interest in acquiring the Alicante telecom, as Finetwork communicated to its staff in an internal statement.

The legal battle between Finetwork and Vodafone began in mid-May last year when the telecom controlled by Zegona initiated legal actions against the Alicante operator due to the debts accumulated by the latter under the various contracts maintained by both companies.

In fact, at the end of May 2024, Vodafone Spain closed a new wholesale access agreement to its network with Finetwork for the next 10 years after the previous one expired and was extended for a couple of months.

Negotiations for the renewal of that contract lasted longer than expected (around five months) and included a debt write-off linked to the previous one of around 40 million euros and tied to the establishment of a new payment schedule.

Additionally, it should be noted that the new wholesale contract, with which Finetwork ceased to be a Vodafone reseller and became a virtual mobile operator, resulted in the migration of 1.2 million mobile and fixed lines from Vodafone Spain to Finetwork.

In fact, this migration has positioned Finetwork as the fifth most important mobile phone operator in the country after displacing Aire Networks from the last spot in the 'top 5', according to the latest data from the CNMC.

On the other hand, Finetwork has had no CEO since December 31 last year, when the departure of Óscar Vilda was announced, who shortly thereafter joined Dazn as CEO for Spain and Portugal.

Since then, the company has been led by a 'transition committee' composed of the brand's founder and president, Pascual Pérez, and the Business and Technology directors, Manuel Hernández and Carlos Valero, respectively.

Another significant change in the company since then is the increased presence of Kai Capital in its shareholding after securitizing a 10 million euro loan signed in the summer of 2024.