Zegona Communications Posts Annual Profit Following Telecable Sale

LONDON (Alliance News) - Zegona Communications PLC on Thursday posted a profit for 2017 following the sale of the Telecable business, and said it has been "disappointed" by the value in fall of Euskaltel.

The company - which turns around European telecoms firms - said its results for the year have been "significantly affected" by the sale of the Telecable business in July 2017. Telecable was Zegona's only operating business.

The company posted a profit for 2017 attributable to equity holders of EUR41.8 million, having made a profit for the year from discontinued operations - which includes the sale of Telecable - of EUR53.0 million, up from EUR920,000 the year before. The company posted a loss attributable to equity holders of EUR5.5 million in 2016.

As part of the sale of Telecable, Zegona received 26.8 million shares in Euskaltel, which represents a 15% stake. The company also received EUR176.7 million from the sale, with deferred payments of up to EUR15 million.

On receiving Zegona's equity interest, the carrying value of the investment in Euskaltel was EUR223.8 million, or EUR8.35 a share. At 31 December 2017, the value of the investment had reduced to EUR182.2 million, or EUR6.8 a share.

"We are disappointed with this reduction in the value of the Euskaltel investment. We believe Euskaltel is a fundamentally sound business that already traded at a significant discount compared to its peers when we announced the sale of Telecable," Zegona said.

"Beyond Spain, we continue to see a very healthy environment for acquisitions across the broader European TMT [technology, media and telecommunications] landscape. There has been an increase in deal activity and we have also seen growth in the availability of assets. We have continued to evaluate new acquisition opportunities and actively pursue those which initially meet our rigorous financial and strategic criteria," the company said.

The company's total payout for 2017 was 7.8 pence per share, up from 4.5p in 2016.

The disposal of Telecable means it is no longer appropriate to commit to pay a progressive dividend, the company said, however it remains "committed" to paying dividends.

Future dividends will be funded by the receipt of dividends from Euskaltel and other cash reserves, the company said.

Shares in the company were 0.2% higher at 100.30 pence on Thursday.