Cellnex speeding up asset sales in drive for investment grade – CEO

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.

Patuano said he expected cash generation at the company 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. You can’t imagine, a lot of cash,” Patuano said.

At that time, Cellnex envisages consolidation among the six largest European tower operators, provided market conditions are favourable.

“(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:)’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.

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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 conducted a review of 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 already agreed the sale of a minority stake in Cellnex Nordics operations in September.

According to a report published 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.

The Spanish company 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.

“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)

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