Santander Corporate & Investment | We welcomed Cellnex (CLNX) (Juan Ignacio Artola, Investor Relations) as part of a tour of presentations, well attended in Frankfurt and Zurich. After the publication of the 2018 results, the main points of interest for investors and messages from the company were:
Cellnex has €4 billion of disposable resources for transactions after the increase of capital of €1.2 billion. Its commitment remains to spend the €1.2 billion of new capital in the next 18 months (which is why we see the use of all disposable resources in the medium term). Cellnex is open to including minority stakes in the next agreements and also to structuring agreements in phased payments (like the agreements with Boygues, which will now amount to €2.04 billion in the period 2016-2024). The company sees its debt limit as 6-6.5 X Ebitda.
The messages about future projects broadcast during the increase of capital remain in place. The company has confirmed opportunities for €11 billion, €4 billion of them in projects more likely or which could be finalised in the short or medium term. Among these public transactions (announced by the sellers) are included TDF (France), CTIL (UK), WindTre (Italy) and Vodafone (various countries). Cellnex is also negotiating some non-public agreements where the seller has offered the possibility of acquisition. In relation to TDF, its retransmission business (if correctly valued) will not prevent Cellnex being interested in all the asset as a whole.
Organic growth: the company´s forecast of PoP growth of 3-4% is maintained, while the contribution of Iliad (Italy and France) could help to accelerate this organic growth. 5G is a good purchase option for tower companies, given the need for densification and the ecosystem created (fibre backhauling, computation at the edge etc), compensating for the impact of the increase shared use agreements in the MNO network.
Italy: the agreement on towers reached between INWIT (Maintain, OP €7.10/share) and Vodafone Italia will have a limited impact on Cellnex´s current business. Cellnex could be open to buying assets which could be put on sale as a consequence of corrective measures associated with this agreement.
We continue to like Cellnex´s long term history (Objective Price for December 2018 of €27.30/share, based only on the current scope), but the potential value of future corporate transactions will begin to be reflects in its listing. Maintain.