Asset sales boost Cellnex numbers and there could be more to come

The passive infrastructure specialist is on a mission to secure an investment grade rating from S&P and as such is focusing on debt-reduction and asset sales after a lengthy period of aggressive expansion and hefty spending. Its 2023 numbers show that the plan is working.

"We have been able to meet our financial targets as well as industrial KPIs, thanks to both a smart control of CAPEX expenditure and a strict and disciplined control of our cost structure," said Cellnex chief executive Marco Patuano. "Throughout the year we made good progress on reducing debt thanks to the disposal of sites in France and the deal in the Nordics with Stonepeak."

Cellnex sold a total of 2,353 mobile sites in France to Phoenix Tower International (PTI) and Bouygues Telecom last year via a couple of transactions, bringing in €631 million; it will finalise the transfer of a further 870 sites this year for an additional €360 million. Admittedly, the French sales were part of a remedy package applied to Cellnex's acquisition of towers and rooftop sites owner Hivory in 2021, rather than a carefully-considered portfolio re-shaping move, but from a financial perspective they serve the same purpose.

Cellnex actively chose to sell a 49% stake in its Swedish and Danish operations to Stonepeak, closing the €730 million deal in November.

And it has just announced the completion of the sale of its private networks business – Edzcom, for the most part – to Boldyn Networks, agreed for an undisclosed sum late last year. While that deal will not have had an impact on its 2023 financials, it was a definite portfolio-shaping move. Having recently identified private networks as a growth area, Cellnex is now out of the business altogether.

Having sold off assets and reined in the spending, Cellnex posted revenues of €4.1 billion for full-year 2023, up from €3.5 billion the previous year, while adjusted EBITDA rose by 14% to just over €3 billion; as such, the firm's margin dropped by a percentage point to 82%. The company turned in positive free cash flow of €150 million – meeting its 2024 target ahead of schedule, it noted – on the back of the French asset sales mainly. And net debt fell by €200 million in the final quarter of the year, the company ending the year with €20.1 billion in net debt.

Cellnex reiterated that it aims to clinch that S&P investment grade rating this year.

Cellnex chair Anne Bouverot talked up "a year of transformation" for Cellnex, that saw the appointment of herself a year ago and CEO Patuano in June.

"Since then, the Company has strengthened the execution of this next chapter, by giving more accountability to the countries with a new organizational model, by realizing some selective disposals, and by continuing to deliver strong financial results," she said.

There's not a lot to read into that comment; it's a positive view on what looks to have been a decent first set of annual results amidst a period of strategy change and shareholder disgruntlement. However, Patuano added that the company will have more to share about its future plans at its Capital Markets Day this week. And it's already clear that we could be looking at more divestments.

"Cellnex continues to evaluate the possibility of monetising other assets to crystallise value and accelerate the process to achieve investment grade from S&P," the company's results announcement notes.