Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Cellnex speeds asset sales in drive for investment grade - CEO

Published 11/21/2023, 07:05 PM
Updated 11/22/2023, 03:45 AM
© Reuters. FILE PHOTO: A telecom antenna of Spain?s telecom infrastructure company Cellnex is seen in Madrid, Spain, April 27, 2022. REUTERS/Susana Vera/File Photo

By Andres Gonzalez and Amy-Jo Crowley

LONDON (Reuters) -Mobile phone tower operator Cellnex will accelerate asset sales in a bid to get an investment grade credit rating by the middle of next year and is preparing for a wave of consolidation in the sector, CEO Marco Patuano told Reuters.

The Spanish company, which has grown through acquisitions since listing in 2015, changed direction last year when rising interest rates forced it to re-focus on cutting debt by selling non-core assets and simplifying the business.

Shares in Cellnex were up 1.5% in Madrid, compared with a 0.4% gain in the broader IBEX index.

Patuano said he expected cash generation would accelerate drastically in two or three years, when capital expenditure (capex) commitments reduce and assets are mature enough to generate higher returns.

"Capex is (now) absorbing all the cash generating. 2024, big capex. 2025, big capex, and then there is a cliff. In 2027, you're generating a lot of cash," Patuano said.

At that time, Cellnex envisages consolidation among the six largest European tower operators.

"(In) Europe (what) will happen is that there are six tower operators today. And tomorrow, I think there will be less than six," Patuano said.

Patuano raised the possibility of reviving his predecessor's 2022 bid for Deutsche Telekom (OTC:DTEGY)'s towers business - now known as GD Towers.

"When the time will be mature, (it) could be a very appropriate use of resources," he said.

CAPITAL MARKETS DAY IN MARCH

In March, Cellnex plans to announce a new strategy to take it through to 2026, incorporating longer-term capital allocation targets.

Since taking the helm in June, Patuano has reviewed the company's portfolio to identify core assets and potential disposals.

"In Ireland and Austria we are considering the possibility of a full disposal," said Patuano, who agreed the sale of a minority stake in Cellnex Nordics operations in September.

According to a report in October by Kepler Cheuvreux, Cellnex's units in Ireland and Austria have enterprise values of 1.05 billion euros ($1.15 billion) and 1.41 billion euros respectively.

Cellnex aims to reduce its leverage ratio below six times its core earnings in 2024 to try to improve its credit rating.

It is also planning to invest about 150 million euros in acquiring the land where its towers sit.

"In the next couple of years, we should improve even more the cash from operations," said Patuano, adding land acquisition was one of the ways to achieve that.

The company is committed to increasing shareholder remuneration in coming years, through dividend payments and share buybacks.

© Reuters. FILE PHOTO: A telecom antenna of Spain?s telecom infrastructure company Cellnex is seen in Madrid, Spain, April 27, 2022. REUTERS/Susana Vera/File Photo

"If you invest in infrastructure, you're not looking for growth without yield, you're looking at yield with a decent growth, which is better than the inflation," Patuano said.

($1 = 0.9168 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.