Cellnex grows 15% and achieves positive cash for the first time

Cellnex, the Spanish giant, European leader in telecommunications towers and other telecom infrastructure, billed 4,053 million in 2023, 16% more than in 2022. If the income from the rebilling of energy to customers is excluded, the billing is would have stood at 3,659 million euros, with a growth of 15% year-on-year. The gross operating margin (ebitda) stood at 3,008 million, with an increase of 14%.

The company closes the year with a positive free cash flow (FCF) of 150 million euros, compared to -1,115 million in 2022, thus consolidating this objective, initially planned for 2024, mainly due to the sale of sites in France to meet with the requirements of the French competition regulator.

Amortization (+10% compared to 2022) and financial costs (+11% compared to the previous year), both associated with the acquired assets, have given rise to a negative net accounting result of 297 million euros.

The net financial debt amounts to 17,287 million euros, which is 200 million less than in the previous quarter. 76% of the debt is referenced to a fixed rate.

Marco Patuano, CEO of Cellnex , noted that “in 2023, Cellnex had good commercial performance and solid operational execution, with revenue and ebitda in line with plan and positive free cash flow ahead of schedule. We have We have been able to meet our financial objectives, as well as our industrial objectives, thanks to prudent investment management and strict and rigorous control of our cost structure. Throughout the year we have made positive progress in reducing debt thanks to the sale of sites in France and the agreement with Stonepeak in the Nordic countries.

Divestments for 1,400 million

In 2023 Cellnex closed the sale in France of 2,353 sites to Phoenix Tower International (PTI) and the joint venture of PTI and Bouygues Telecom in accordance with the conditions ( remedies ) established by the French Competition Authority. Cellnex has earned 631 million euros from the sale of these assets, to which it plans to add an additional 360 million euros – after the closing of the transfer of the approximately 870 remaining sites – in 2024.

Likewise, in November, it closed an agreement with Stonepeak for the sale of a 49% stake in Cellnex Sweden and Cellnex Denmark for 730 million euros – equivalent to a multiple of 24 times the estimated ebitda in 2024.

Also, in line with the strategy of focusing on activities and businesses around telecommunications towers, in 2023 Cellnex closed the sale to Boldyn Networks of its private networks business unit, mainly made up of the Finnish Edzcom for 30 million. In this way, throughout 2023 it has made divestments worth 1,391 million euros, to which the additional 360 million must be added when the sale of the rest of the sites in France is closed.

The company points out that “in parallel, Cellnex continues to evaluate the possibility of monetizing other assets to crystallize value and accelerate the process to reach S&P investment grade.” Among these assets, the sale of 100% of the Irish subsidiary is very advanced, for which the main candidates for the purchase are the American Phoenix Towers and SBA.

Poland

Likewise, the sale of a minority stake in the Polish subsidiary has also been launched, in which KKR, GIP and Macquarie would be interested. The value of the subsidiary is around 4,000 million euros. The potential sale of the minority stake in the Polish subsidiary is directly related to the purchase of the radio network from Play, one of the 4 mobile operators in Poland. Cellnex already controls the radio network of Polkomtel, another of the Polish operators, and if it took over Play it could mutualize the networks of the two operators, achieving important industrial synergies. It is the case that the two major rivals of Play and Polkomtel and Play are Orange and Deutsche Telekom and these two groups have already created a joint mobile network subsidiary, which gives them competitive advantages over their other two rivals.

Business

The bulk of Cellnex’s business is infrastructure services for telecom operators, mainly towers, which in 2023 accounted for 91% of total revenues, with 3,685 million euros, which represents a growth of 16% compared to 2022.

Broadcasting infrastructure activity (TV and radio signal transport networks, mainly in Spain) contributed 6% of revenues with 230 million. Businesses focused on security and emergency networks accounted for 3% of revenues, with 138 million euros.

As of December 31, Cellnex had a total of 113,175 operational sites (without taking into account the 16,080 sites planned to be deployed by 2030, which would bring the figure to around 130,000). Of them, 23,737 are located in France, 22,160 in Italy, 16,040 in Poland, 13,218 in the United Kingdom, 10,535 in Spain, 6,541 in Portugal, 5,487 in Switzerland, 4,616 in Austria, 4,104 in the Netherlands, 3,114 in Sweden, 1,985 in Ireland and 1,638 in Denmark.

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