Bankinter | Cellnex is negotiating an agreement with Brookfield Asset Management to make a joint bid for Deutsche Telekom’s telecommunications towers affiliate. The deal consists of a group of 40.600 towers in Germany and Austria, worth close to 20 billion euros. The process for lodging bids has already started and will extend over the coming weeks.
Bankinter analyst team’s opinion:
We foresee the news having a neutral impact on the share price. The company already confirmed that it would take part in the process and was considering teaming up with a financial partner. We estimate that Cellnex has an investment capacity of some 10 billion euros. So if goes along with a financial parner, it could acquire a majority stake without having to increase capital. It would be a transformational operation for Cellnex as it would increase its portfolio of towers by 23%. This would allow it to consolidate its position as the undisputable leader in Europe, distancing itself from competitors like American Tower, Vantage or Totem.
Although the acquisition price is apparently reasonable (~490.000€/tower), it’s still early to determine what the impact on valuation will be. We are maintaining our Buy stance. Cellnex offers solid fundamentals: (i) Leader in telecommunications towers in Europe; (ii) High visibility in terms of cash flow, with growth close to 20% 2021-2025e and an attractive yield going forward (>7% annually); (iii) large investment capacity (c. 10 billion euros); and (iv) solid financial position, with average maturity of over 6 years and mostly at fixed cost. Whatsmore, it offers protection against inflation, with a large part of its contracts inflation-linked.
CELLNEX (Buy; Target Price: 52,67 euros/share)
