Santander Corporate & Investment | Cellnex (BB+ p, BBB- e) has announced the acquisition from Iliad of its 30% stake in OnTower Poland, the Polish telecommunications infrastructure company controlled by Cellnex. The transaction costs around €510mn and brings Cellnex’s stake in OnTower Poland to 100%. According to the press release, OnTower Poland currently operates a total of 8,500 sites in Poland, plans to deploy up to 3,400 new sites by 2030 and has a 20-year service contract with Play, extendable for additional successive 10-year periods. Cellnex also noted that the “transaction should be seen as an intermediate step in the process of actively assessing strategic opportunities for our existing portfolio to unlock value and accelerate the path to Investment Grade status”.
Assessment: The news of the Polish acquisition may be viewed as neutral for Cellnex’s credit profile. Cellnex will likely achieve debt reduction through organic cash flow generation to meet S&P’s leverage targets by the end of 2024; the sale of minority stakes in some businesses could accelerate the process. Cellnex’s credit spreads have converged with those of its Investment Grade peer American Towers, but some potential for further spread tightening when the sale of a significant minority stake is announced may be seen. The Overweight recommendation on Cellnex is still maintained and value in longer-term bonds is still in place.
