Business

Cellnex considers €1bn exit from Irish market

Mobile phone tower operator owns telecoms assets originally developed by Coillte

Cellnex's headquarter building in Barcelona. The Spanish group is mulling the disposal of its Irish assets.

Wed Nov 22 2023 - 10:35

Mobile phone tower operator Cellnex is considering a full exit from the Irish market as it seeks to get an investment-grade credit rating by the middle of next year, its chief executive said. The business has been active in the State since 2019 when it acquired telecoms infrastructure business Cignal in a €210 million deal. Cignal had previously bought a portfolio of telecoms towers from semi-State forestry company Coillte.

An industry valuation suggests the Irish assets could now be worth at least €1 billion.

Cellnex chief executive Marco Patuano told Reuters that the group is preparing for a wave of consolidation in the sector.

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

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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, which has grown through acquisitions since listing in 2015, changed direction last year when rising interest rates forced it to refocus on cutting debt by selling noncore assets and simplifying the business. According to a report in October by Kepler Cheuvreux, Cellnex’s units in the Republic and Austria have enterprise values of €1.05 billion and €1.41 billion.

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Shares in Cellnex were up 1.5 per cent in Madrid, compared with a 0.4 per cent gain in the broader Ibex index.

Mr 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,” Mr 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,” Mr Patuano said.

Mr Patuano raised the possibility of reviving his predecessor’s 2022 bid for Deutsche Telekom’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.

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, Mr Patuano has reviewed the company’s portfolio to identify core assets and potential disposals.

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 in acquiring the land where its towers sit. – Reuters

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