What happened? *On Friday afternoon Expansion, the Spanish newspaper, reported that Digi had hired advisors regarding a potential IPO of their Spanish business - see here: Digi contrata a Rothschild para sacar a Bolsa su negocio en Espana | Empresas Tecnologicas *The article suggests that the IPO could value the company at an Enterprise Value of EUR 2.5 bn, equivalent to ~9x EV/EBITDA (based on consensus forecasts of EUR 275-285m EBITDA in 2025, vs. EUR 153m in 2024) *The IPO proceeds would be ''to finance the company''s future growth in Spain'', and the article suggests that Digi Communications would still own a majority stake post IPO. BNPP Exane View: *As the article itself references, the timing of this announcement is particularly interesting given continued reports that Telefonica could be looking to consolidate the Spanish telco market as part of their upcoming strategic review (most recent reports suggesting that TEF could look to acquire Zegona). *One read the Digi''s IPO plans could be that the company is looking for cash to invest in potential remedies coming from a TEF-Zegona deal (which could be even more significant than those acquired from the Orange-MasMovil deal, given that TEF-Zegona''s combined market share would be even higher). *Alternatively, this could be a move by Digi to establish their own, independent valuation for the Spanish business ahead of any consolidation talks they are involved in directly - i.e. either as part of a TEF-Digi deal or Zegona-Digi deal. *Ultimately it is difficult to read too much into the reports at present. But it does seem like momentum behind some kind of Spanish deal is building ahead of TEF''s strategic review, and our view is that there is less support for this option amongst investors vs. a German consolidation deal (acquiring 1and1) given the potential for more regulatory scrutiny and less clear synergy benefits.