Zegona bought Vodafone Spain in 2024 hoping to lower costs. But tower leases tied to inflation kept getting more expensive. Now it plans to switch providers.
The new lease agreements are close to being signed, though none of the companies have commented publicly.
Think of it like a renter switching landlords to get a lower monthly payment. Some antennas might remain on Vantage towers if relocation proves impractical.
After buying Vodafone Spain, Zegona made cutting tower lease costs a top priority.
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Zegona's management saw renegotiation or replacement as essential to restoring profitability. With the current agreement expiring in 2028, the company had time to shop around and secure better terms from Cellnex and American Tower, both of which have significant tower portfolios in Spain.
Zegona pushed Vantage to lower its prices. When that did not work, it decided to move the business to Cellnex and American Tower when the current contract runs out in 2028. Oak Holdings, a consortium comprising Vodafone Group Plc, KKR & Co., and Global Infrastructure Partners, owns Vantage Towers.
The Spanish telecom tower market is highly competitive, with several major infrastructure owners vying for contracts from operators like Vodafone, Orange, and Telefónica. By diversifying its tower providers, Vodafone Spain gains negotiating leverage and reduces dependence on a single landlord. This strategy aligns with Zegona's broader turnaround plan for the business, which also includes cost cuts in other areas and a renewed focus on customer retention. The switch, while still two years away, signals to investors that management is actively working to improve profitability from its Spanish operations.
Cellnex shares gained 2.6% on the Madrid exchange late on the Friday the report was published. Investors saw the deal as a win for Cellnex, which will gain a large new customer in Spain.
For Zegona, the move means cheaper lease costs for Vodafone Spain starting in 2028. That should help the company improve its margins in a competitive market.
The reduced tower expenses will directly boost Vodafone Spain's profitability, freeing up cash that can be reinvested in network upgrades or customer retention efforts. Zegona has faced pressure from investors to deliver cost savings since its acquisition, and this renegotiation - though still two years away - demonstrates concrete progress. The company's ability to secure lower rates from two alternative providers also strengthens its negotiating hand for future lease renewals across its broader portfolio.
The exact terms of the new lease agreements are not yet public. Investors will wait for official announcements from Zegona, Cellnex, and American Tower.
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