A telecom antenna of Spanish telecommunications infrastructure company Cellnex is seen in Madrid, Spain, April 27, 2022. REUTERS/Susana Vera/File Photo Acquire Licensing Rights
LONDON, Nov 22 (Reuters) – Mobile phone tower operator Cellnex ( CLNX.MC ) will accelerate asset sales in a bid to get an investment-grade credit rating by the middle of next year and brace for a wave of consolidation in the sector, Chief Executive 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 refocus on cutting debt by selling non-core assets and simplifying the business.
Patuano said he expects the company’s cash generation to accelerate dramatically in two or three years, when capital expenditure (capex) commitments decrease and assets are mature enough to generate higher returns.
“Capex (now) eats up all the cash generated. 2024, major capital expenditure. 2025, big capex and then there’s scale. In 2027, you generate a lot of money. You can’t imagine, a lot of money,” Patuano said.
At the time, Cellnex envisioned consolidation among the six largest European tower operators, provided market conditions were favorable.
“(In) Europe (what) will happen is 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’s tower business – now known as GD Towers. “When the time comes, (it) can be a very appropriate use of resources,” he said.
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In March, Cellnex plans to announce a new execution strategy to 2026, including longer-term capital allocation targets.
Since taking the helm in June, Patuano has conducted a review of the company’s portfolio to identify key assets and potential disposals.
“In Ireland and Austria, we are considering the possibility of a full divestment,” said Patuano, who already agreed to sell a minority stake in Cellnex Nordics’ operations in September.
According to a report published in October by Kepler Cheuvreux, Cellnex’s Irish and Austrian divisions 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 also plans to invest around 150 million euros in acquiring the land where its towers are located.
“Over the next few years, we need to improve cash from operations even more,” Patuano said, adding that land acquisition is one way to achieve that.
The company is committed to increasing shareholder rewards in the coming years through dividend payments and share buybacks.
“If you’re investing in infrastructure, you’re not looking for growth without yield, you’re looking for yield with decent growth that’s better than inflation,” Patuano said.
($1 = 0.9168 EUR)
Reporting by Andres González and Amy-Jo Crowley Editing by Anusha Saqui and Mark Potter
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