Spanish infrastructure giant Cellnex has said it will acquire the Arqiva telecommunications business unit for £2 billion.

Jamie Davies

October 8, 2019

3 Min Read
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Spanish infrastructure giant Cellnex has said it will acquire the Arqiva telecommunications business unit for £2 billion.

The transaction will make Cellnex the largest independent wireless infrastructure company in the UK, as well as the largest across Europe. The deal will add 7,400 sites to the footprint, as well as the rights to market an additional 900 across the UK. Cellnex’s total portfolio now exceeds 53,000 sites.

“The Arqiva Telecoms division acquisition is a key milestone for Cellnex,” said Tobias Martinez, CEO of Cellnex.

“Its strong UK asset-base, revenues and financial profile, combined with its long history at the heart of UK digital infrastructure, make it a perfect addition to our operations. This deal will not only add c.8,300 telecom sites to our portfolio but an experienced team that will further strengthen Cellnex’s demonstrated ability to meet its customers requirement.”

This is another step towards the aggressive expansion of the Cellnex business. Since the company’s IPO in 2015, Cellnex has invested or committed to invest €10.8 billion, via acquisition or construction. Between 2015 and 2027, should the company meet its own targets, it would have grown the asset portfolio by 42,000 structures.

Elsewhere in the M&A domain, Cellnex has entered into long-term strategic cooperation agreements with Iliad and Salt to acquire roughly 10,700 sites. It has also entered build to suit (BTS) programmes with the two telcos to build an additional 4,000 sites. Last month, it also announced the acquisition of Cignal in Ireland. This deal brought 546 sites into the portfolio, while there are plans to deploy another 600 by 2026.

And while owning structures across the continent is a very valuable business nowadays, another interesting element to this deal will be access to street furniture in London.

Arqiva currently manages concessions to use street furniture, lampposts for example, as locations for network infrastructure equipment in 14 London boroughs. This has proven to be somewhat of a controversial topic in recent months, with some telcos, such as BT, calling for open-access to street furniture to improve mobile experience.

“While the concessions model made sense in the early 2010’s when it first came into common use, the market and regulatory landscape have changed, and it’s become clear that exclusivity agreements act as a barrier to further 4G and 5G investments,” Paul Ceely, BT’s Director of Network Strategy, said at the time.

BT plans to increase small cell deployment across the capital for network densification plans. These initiatives are key to addressing network congestion in the busiest areas, but also compensating for the shorter coverage experienced when making use of higher frequency spectrum in the future.

These concessions are attractive to both the councils and the infrastructure companies. The councils collect the concession fee, while the infrastructure company assumes the business risk and collects the wholesale fee from the telco. Enough of these concessions and it turns into nice profit-maker, though it will not be making friends with the telcos, who effectively want something for nothing.

With existing relationships with all four UK MNOs, as well as joint-ventures MBNL and CTIL, this could prove to be a useful transaction for Cellnex. Despite 5G being launched across the UK, the rollout has been slightly staggered due to the on-going Supply Chain Review. There is plenty of profit to collect as the 5G bonanza gathers steam.

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