© Reuters. FILE PHOTO: A telecom antenna of Spain?s telecom infrastructure firm Cellnex is seen in Madrid, Spain, April 27, 2022. REUTERS/Susana Vera/File Photo
By Andres Gonzalez and Amy-Jo Crowley
LONDON (Reuters) – Mobile cellphone tower operator Cellnex will speed up asset gross sales in a bid to get an funding grade credit standing by the center of subsequent yr and is making ready for a wave of consolidation within the sector, CEO Marco Patuano instructed Reuters.
The Spanish firm, which has grown by acquisitions since itemizing in 2015, modified course final yr when rising rates of interest pressured it to re-focus on slicing debt by promoting non-core belongings and simplifying the enterprise.
Patuano stated he anticipated money technology on the firm would speed up drastically in two or three years, when capital expenditure (capex) commitments cut back and belongings are mature sufficient to generate larger 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. You can’t imagine, a lot of cash,” Patuano stated.
At that point, Cellnex envisages consolidation among the many six largest European tower operators, supplied market situations are beneficial.
“(In) Europe (what) will happen is that there are six tower operators today. And tomorrow, I think there will be less than six,” Patuano stated.
Patuano raised the opportunity of reviving his predecessor’s 2022 bid for Deutsche Telekom (OTC:)’s towers enterprise – now often known as GD Towers. “When the time will be mature, (it) could be a very appropriate use of resources,” he stated.
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In March, Cellnex plans to announce a brand new technique to take it by to 2026, incorporating longer-term capital allocation targets.
Since taking the helm in June, Patuano has carried out a evaluation of the corporate’s portfolio to determine core belongings and potential disposals.
“In Ireland and Austria we are considering the possibility of a full disposal,” stated Patuano, who already agreed the sale of a minority stake in Cellnex Nordics operations in September.
According to a report printed in October by Kepler Cheuvreux, Cellnex’s models in Ireland and Austria have enterprise values of 1.05 billion euros ($1.15 billion) and 1.41 billion euros respectively.
Cellnex goals to cut back its leverage ratio beneath six instances its core earnings in 2024 to attempt to enhance its credit standing.
The Spanish firm can also be planning to take a position about 150 million euros in buying the land the place its towers sit.
“In the next couple of years, we should improve even more the cash from operations,” stated Patuano, including land acquisition was one of many methods to attain that.
The firm is dedicated to growing shareholder remuneration in coming years, by dividend funds and share buybacks.
“If you invest in infrastructure, you’re not looking for growth without yield, you’re looking at yield with a decent growth, which is better than the inflation,” Patuano stated.
($1 = 0.9168 euros)