Cellnex eyes asset sales ahead of broader towers consolidation

Cellnex is mulling the sale of tower assets in Austria and Ireland as part of its deleveraging push and ahead of what it believes will be wider consolidation in the European market.

The passive infrastructure specialist’s CEO March Patuano said as much in an interview with Reuters recently. He told the newswire that the firm is considering a full disposal of its businesses in those markets, businesses it bulked up considerably via the €10 billion deal for CK Hutchison’s European towers it inked in late 2020.

Cellnex closed the Austria and Ireland portions of that deal in early 2021, adding 1,150 and 4,500 towers respectively to its existing footprints there. Nearly three years on and its focus has completely changed.

This time last year, when the UK part of the Hutch deal finally closed, Cellnex made it clear that henceforth it would target organic growth and was shooting for an investment grade rating from S&P. Deleveraging became the name of the game and, following a change of management earlier this year, the company is on a completely different path to the one it once followed.

The firm brokered a deal with investment firm Stonepeak in September to sell a 49% stake in its Swedish and Danish operations as part of that debt reduction plan. And earlier this month it agreed to sell its Edzcom private networks business to Boldyn Networks, essentially pulling out of a market it until recently viewed as a strong growth opportunity, again in the name of debt-management and in pursuit of that S&P rating.

It indicated at the time that it would continue to “evaluate the possibility of monetising other assets,” so Reuters’ chat with Patuano hardly comes as a surprise. Rather, it adds some colour to what we already knew about Cellnex’s strategy.

There were also a couple of other interesting snippets of information in that interview: firstly, Patuano’s comments on cash and secondly his views on the market as a whole and the role his company will play in it.

Cellnex will have a sizeable capex bill for the next couple of years, with capital spending absorbing all the cash the business generates, he said. Capex will be high in 2024 and 2025, but will fall dramatically after that, meaning that Cellnex will be generating a lot of cash by 2027, he predicted.

That same time period could see big changes in the European towers landscape. There are six major tower operators in Europe at present, but that number will fall in the next few years, Patuano believes.

And while his plans for asset sales in certain European markets might lead industry watchers to guess that Cellnex will be a seller rather than a buyer, that does not seem to be the case.

The chief exec indicated that he could be interested in a new bid for Deutsche Telekom’s GD Towers business; Cellnex was one of a number of companies lined up for the asset that eventually went to DigitalBridge and Brookfield last year.

Patuano told Reuters that such a move could be a “very appropriate use of resources,” once the time is right.

Looks like Cellnex’s U-turn on spending could be short lived.