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MarketScreener Homepage  >  Equities  >  Bolsa de Madrid  >  Cellnex Telecom    CLNX   ES0105066007

CELLNEX TELECOM

(CLNX)
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Cellnex Telecom : French tycoon Niel to sell mobile towers to Cellnex for 2.7 billion euros

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05/07/2019 | 07:43am EST
Guests waits before French telecoms operator Iliad the media conference in Milan

PARIS/MADRID (Reuters) - French tycoon Xavier Niel has agreed a 2.7 billion euro (2.3 billion pounds) deal to sell mobile towers in France, Italy and Switzerland to Cellnex as he seeks to bolster the finances of his telecoms group Iliad.

By Mathieu Rosemain and Andrés González

Iliad burnt through 1.44 billion euros in cash in 2018, twice as much as in 2017, and has lost half its market value over the last year.

The deal by billionaire Niel, considered a maverick in France's telecoms sector, follows a similar one by French rival Bouygues Telecom in 2017 under which it sold about 3,000 mobile sites to Cellnex for 900 million euros.

For Spanish towers group Cellnex, the acquisitions of thousands of new sites in the three countries allow it to extend its reach in Europe, where it has grown considerably over the past few years and is now seen as a key player in a potential consolidation of the telecoms infrastructure market.

Iliad shares were 5.6 percent up at 0926 GMT, while Cellnex's were 6.6 percent higher.

"This is quite a sensible move for them for two reasons: one is that it gives Iliad the financing to roll out in Italy, second ... Cellnex will end up having much better utilization of the infrastructure," said Karen Egan, an analyst at Enders.

Iliad, which has shaken up the French mobile market since 2012 with low-cost services, is facing aggressive fixed and mobile discounts from rivals in its home country.

Part of the proceeds from the towers sale will help to cut its debt and invest in networks in both France and Italy, it said. The deal was announced hours before Iliad's investor day in Paris on Tuesday.

TRANSFORMATIONAL

Analysts say the 2.7 billion euro investment is transformational for Cellnex, increasing by 75 percent earnings before interest, tax, depreciation and amortisation (EBIDTA) and doubling its recurrent leveraged free cash flow.

It would allow the Spanish group to take control of Iliad's 5,700 sites in France and the 2,200 in Italy. It would also take control of the mobile towers of Salt, the Swiss telecom operator privately-owned by Niel.

Cellnex also intends to spend an additional 1.35 billion euros on the roll-out of 2,500 new sites in France, 1,000 sites in Italy and 500 in Switzerland between 2020 and 2027. 

"This is a big deal for Cellnex and materially increases the scale. We further believe there remains further opportunities for Cellnex to continue to do deals," said Credit Suisse in a note to clients.

Cellnex Chief Executive Tobias Martinez said on a conference call Britain's CTIL would be an appealing target but reiterated it could not afford to invest in France's TDF, which Spanish newspaper Expansion said it was considering.

Iliad, whose first-quarter sales grew by 7.7 percent to 1.29 billion euros, said it targeted a return to revenue growth in France in 2019 and an acceleration of its core operating profit growth in the second-half of the year.

(Reporting by Mathieu Rosemain in Paris and Andres Gonzales in Madrid; Additional reporting by Paul Day; Editing by Sudip Kar-Gupta and Emelia Sithole-Matarise)

By Mathieu Rosemain and Andrés González

Stocks mentioned in the article
ChangeLast1st jan.
CELLNEX TELECOM -1.08% 48.36 End-of-day quote.27.42%
ILIAD 0.07% 136.1 Real-time Quote.17.70%
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Financials (EUR)
Sales 2019 1 032 M
EBIT 2019 199 M
Net income 2019 0,86 M
Debt 2019 3 228 M
Yield 2019 0,17%
P/E ratio 2019 9 809x
P/E ratio 2020 175x
EV / Sales2019 21,2x
EV / Sales2020 15,8x
Capitalization 18 625 M
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Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 43,74  €
Last Close Price 48,36  €
Spread / Highest target 19,9%
Spread / Average Target -9,56%
Spread / Lowest Target -43,8%
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NameTitle
Tobías Martínez-Gimeno Chief Executive Officer & Executive Director
Franco Bernabè Non-Executive Chairman
Alberto López Prior Operations Director & Resource Director
José Manuel Aisa Mancho CFO & Director-Corporate Development
Pierre Blayau Independent Director
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