Saudi Telecom and PIF plan big bid for Cellnex's Austria towers

The pair are among a host of companies that could well bid for the Austrian operation Cellnex is keen to exit, according to El Economista, which apparently learned of the Saudi interest from "sources in the sector."

That Saudi Telecom and PIF, or Public Investment Fund, to give the telco's majority shareholder its full title, are looking at a big European expansion deal comes as no surprise at all. When the companies announced their intention to merge their existing towers businesses earlier this week it was pretty clear that, amongst other things, the deal would serve as a springboard for overseas growth. What is surprising is how quickly this Austria rumour has sprouted.

Speed aside, it makes a lot of sense.

Cellnex famously spent €10 billion on the acquisition of CK Hutchison's tower assets across a dozen European markets via a series of deals, the last of which closed around 18 months ago. Since then, the infrastructure firm has undergone a massive strategic change, which has brought a focus on organic growth and some asset sales.

Cellnex has made no secret of the fact that its Austria business, much of which was acquired through the CK Hutchison deal, is earmarked for sale. At its recent Capital Markets Day it indicated that a deal in Austria could come in the second half of 2024.

And rumour has it that there is plenty of interest. According to El Economista, a raft of investors and towers companies are looking at those Austrian assets. It lists Vauban Infrastructure Partners, Igneo Infrastructure Partners, EQT, Phoenix Tower International, GD Towers, Digital Bridge and Brookfield.

The Spanish paper notes that Cellnex's annual shareholder meeting is scheduled for Friday, with a Q&A that will likely feature requests for information on the planned Austria sale. We could have more to go on by the end of the week.

For now, the suggestion that a STC/PIF consortium could also be among the interested parties is a highly credible one.

Having just announced plans to merge their TAWAL and Golden Lattice Investment Company (GLIC) Saudi Arabia towers businesses, belonging to STC and PIF respectively, the firms are doubtless moving as fast as they can to close the deal, which is slated for the second half of this year, the usual sign-offs and regulatory hurdles permitting. As well as looking to build regional scale through the deal, the companies have their sights set further afield; both have made it clear in recent months that they have global ambitions.

STC's TAWAL has already made a start, spending €1.2 billion in cash last year on the acquisition of 4,800 towers from Bulgaria, Croatia, and Slovenia United Group. Neighbouring Austria seems like a logical next step, irrespective of whether the GLIC merger closes first or not.