Spanish tower operator Cellnex has continued down the path of aggressive expansion, launching a new joint venture with Bouygues Telecom and announcing 15% growth at its earnings call.

While infrastructure companies are not necessarily given the largest share of the limelight, Cellnex has been doing everything possible to grab headlines over the last few months. It spent €800 million to buy Portuguese tower company Omtel in January, bought Iliad’s tower assets in France and Italy in December, in October it acquired the Arqiva telco business unit in the UK for £2 billion and bought 2,239 towers in Switzerland from Sunrise during the summer.

Adding another joint venture to such a quick-fire spending spree might get some investors nervous, but these twitchy financiers might well be calmed by the earnings call. Year-on-year revenue growth of 15% and a backlog of contracted future sales which exceeds €44 billion would calm even some of the most worrisome spreadsheet warriors.

“Certainly 2019 has been a transformational year that marked a quantum leap in terms of size as well as a qualitative leap in consolidating the group’s position in its key markets, while further expanding our geographical footprint in Europe with the incorporation of two new countries –Ireland and Portugal—into our operations,” said Cellnex Franco Bernabè Chairman.

“Another prominent highlight is the trust that Cellnex’s shareholders place in our project, evidenced by their high degree of participation in and support for the two capital increases carried out in March and October.”

Total revenues for the year stood at €1.035 billion, a 15% year-on-year increase, which the aggressive acquisition strategy resulting in a total of 36,471 operative sites and a further 1,995 nodes across the network. These might sound like impressive numbers for the moment, though when you account for the agreed upon investments for the future, an additional 28,000 assets will be added to the portfolio across the eight European countries in which the company is present.

Looking at the joint venture with Bouygues Telecom, Cellnex will contribute €1 billion to fund a 31,500km fibre optic network in France to provide mobile backhaul and fixed connectivity services. Bouygues Telecom will act as the anchor-tenant of the network as a result of signing a 30+5-year contract worth €4 billion and will account for an estimated 80% of the joint ventures total revenues.

While Cellnex has been operating in France since 2016, the additional 5,000 rooftop and towers assets and fibre network as a result of this deal will certainly build on this presence. Thanks to this and previous deals with Bouygues Telecom, as well as the purchase of Iliad’s 5,700 sites, Cellnex will soon manage a portfolio of almost 14,000 sites in France, becoming the company’s single largest market.

For companies like Cellnex, this appears to be the perfect time to drive forward with expansion plans. The global telco industry is one which is generally cash-constrained, though there is plenty of pressure to aggressively deploy new infrastructure for both mobile and fixed networks. This is not a balanced equation, but the infrastructure companies are certainly in a position to benefit.

Firstly, thanks to the cash constraints of the telcos, there are opportunities for the likes of Cellnex to purchase assets at what some could consider bargain prices. The telcos need cash to fuel the 5G and fibre expansion, though it seems passive mobile infrastructure are assets deemed dispensable.

Secondly, once the telcos dispatch of these dispensable assets and scale back investments in new passive infrastructure, these become very attractive rental customers. Passive infrastructure is a long-term play for ROI, but the demand is hardly likely to subside in the future.

Arguably the telcos are being painted into an uncomfortable corner. These are companies which need cash, therefore disposal of non-critical assets is perhaps necessary. However, it will always be a more financially attractive position to own passive infrastructure than enter into lease agreements over extended periods of time.

This is the conundrum which the telcos are currently facing, maybe it could be considered a ‘short-term gain, long-term pain’ scenario, but Cellnex isn’t being shy in its attempt to capitalise on the situation.