Cellnex close to Austria deal as organic growth push continues

The news – accompanied by the suggestion that an earlier than expected distribution to shareholders may well ensue once the deal is done – clearly sat well with investors, the European towers operator's share price heading northwards.

However, the uptick could well be linked to a decent financial performance as well, including solid cash-generation and topline growth. A hefty net loss, amounting to €418 million, captured some headlines, but given that it came about as a result of an impairment linked to the Austria sale as well as well as costs associated with its previous high investment phase, the market was not spooked. Cellnex's net loss for the corresponding period a year earlier was €196 million, incidentally.

We don't have a lot to go on with regard to the Austria sale at present, although Cellnex's comments indicate that it is likely to come soon.

"The company is in advanced negotiations after having received binding offers for its business," Cellnex said, referring to the Austrian operations. It did not give any kind of timeline, but has previously intimated that it expects to ink a deal in the second half of this year.

A number of companies have been linked with the purchase of Cellnex Austria. Most recently, Saudi Telecom Company (STC) and its major shareholder PIF were reported to be considering spending more than €800 million on the unit, joining the likes of Vauban Infrastructure Partners, Igneo Infrastructure Partners, EQT, Phoenix Tower International, GD Towers, Digital Bridge and Brookfield as rumoured possible buyers.

Phoenix Tower agreed to pay €971 million for Cellnex Ireland in March. Cellnex had identified those two operations as none-core, earmarking them for sale as it sought to focus on key markets that offered growth opportunities.

Those divestments and the chasing of investment-grade ratings – which it secured from S&P in March – were all part of a strategic U-turn for Cellnex, which is seeking to shake off its legacy as a big spending and instead focus on organic growth and debt-reduction.

It did both in the first half of this year. Net debt came in at €17.5 billion at the end of June, down from €20.1 billion six months earlier. And the numbers showed both financial and operational growth.

Revenues were up by 7% year-on-year to €1.9 billion, while EBITDAaL grew by more than 8% to €1.1 billion, and that all-important free cash flow figure came in at €49 million, which compares favourably to a negative €130 million a year earlier.

The company also trumpeted a 9.3% organic increase in the number of PoPs, the split heavily weighted towards new colocations at existing sites at 4.668, mainly in Italy and Portugal, and the rollout of 2,482 new PoPs, largely on the back of build-to-suit (BTS) programmes in France and Poland.

It's a far cry from the company that was buying up cell sites in their tens of thousands just a few short years ago.