Cellnex to Grow Existing Markets After Failed DT Towers Bid

BARCELONA (Reuters) – Spain’s Cellnex said on Thursday it would consolidate and expand in its 12 existing European markets after a failed bid for Deutsche Telekom’s (DT) towers business.

Europe’s largest mobile phone tower operator withdrew an offer for a stake in the DT business earlier this month. The 51% stake was clinched by Brookfield and DigitalBridge in a deal that valued the business at 17.5 billion euros ($17.9 billion).

The deal would have allowed Cellnex to enter Germany.

“Our financial package was super competitive,” chief executive Tobias Martinez told analysts on a results call, noting there were no doubts about a return on the investment.

“The main issue was the lack of strategy fit and the lack of capacity (handed to) Cellnex in order to consolidate and run the assets, and to run the company, which for us is a must,” he added.

Under the winning bid, DT will continue to run the business and has the right to regain control and reconsolidate it in the future.

Many telecoms firms have carved out tower businesses, or launched joint ventures, as a way to raise money, while keeping a stake to benefit from any future growth.

Cellnex raised capital in April 2021 and gave itself 18 months to invest in acquisitions. Martinez said the company would extend that period after failing to clinch the DT deal, but did not give a new timeframe.

Cellnex, which has 104,000 masts, reported first-half core earnings of 1.28 billion euros, up 59% year-on-year, benefiting from its expansion and rising revenue. The company kept its 2022 outlook.

However, its net loss doubled to 170 million euros due to higher amortization and costs from its 2021 acquisitions.

At 0930 GMT, Cellnex shares were down 3.5%.

For 2022, the company expects adjusted earnings before interest, tax, depreciation and amortization to increase to 2.65-2.7 billion euros, and revenue of 3.46-3.51 billion.

In the first half, revenue grew 59% to 1.69 billion euros as its number of masts increased by 27%.

Its net financial debt in June was 14.3 billion euros versus 11.9 billion at the end of 2021. Available liquidity is 7.6 billion euros.

(Reporting by Joan Faus; Additional reporting by Andres Gonzalez and Tiago Brandao; Editing by Inti Landauro and Mark Potter)

Copyright 2022 Thomson Reuters.


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