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Cellnex inches towards UK deal closure with towers sale

Cellnex has brokered a deal to sell 1,100 tower sites in the UK to Wireless Infrastructure Group for an undisclosed sum.

Those sites are something of a drop in the ocean for Cellnex, which boasts a 138,000-strong footprint including planned builds across Europe, but the deal is significant because it brings the passive infrastructure specialist one step closer to completing the acquisition of CK Hutchison’s UK towers, as agreed almost two years ago.

That deal made headlines due to its size, coming it at €10 billion for 24,600 sites across six European markets. But once the dust had settled, it became clear that actually getting it over the line would be a challenge in some countries. The transaction was structured on a market-by-market basis, and while some regulators were happy to rubber stamp their portion, others expressed concerns over the impact on competition.

However, by mid-2021 Cellnex had closed the acquisitions in five of the six markets giving it 18,600 new towers in Austria, Denmark, Ireland and Sweden, as well as Italy, which was the last to give the green light, subject to certain pro-competition conditions. That just left the UK and the remaining 6,000 towers.

Cellnex knew it was facing an uphill battle in the UK, where the Competition & Markets Authority (CMA) had identified a risk to market competition and was looking closely at the proposed deal. Nonetheless it was confident of tying it all up in the first half of this year…which at the time seemed like plenty of time, regardless of the extent of the CMA’s investigation.

But all those involved in the UK deal appear to have dragged their heels more than any of us could have predicted.

The CMA gave the regulatory thumbs-up in March, but added a condition, based on a remedy proposal from Cellnex: the infrastructure firm would have to sell north of 1,000 towers in areas where its existing footprint overlapped with that it was proposing to acquire from CK Hutchison. That didn’t seem too big an ask, given that the sites in question would presumably be surplus to requirements once the deal closed anyway.

But it clearly turned out to be a more troublesome job than we had imagined. It has taken almost eight months for Cellnex to secure a buyer, in the form of UK neutral host WIG, which is perhaps not surprising given that we’re talking about an overlapping footprint here. There’s a good chance this is not a financially significant deal.

Nonetheless, WIG is suitably upbeat on the move.

“This is a significant opportunity to extend our premium services across these new assets and to ensure the best possible infrastructure delivery for customers moving forward,” said WIG chief executive Scott Coates.

The company added that once the deal closes it will take control of the asset portfolio and take over customer engagement under a comprehensive set of transitional arrangements it has agreed with Cellnex. Maybe that’s what took so long.

The firms said they expect the acquisition to close by the end of this year, but it seems that simply having a deal in place will be enough to enable Cellnex to close the Hutch deal; it now predicts that will complete in early-to-mid-November.

Should that prediction prove correct, it could well happen exactly two years after the deal was first announced. Who said this is a fast-moving industry?

 

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