Renta 4 | Deutsche Telekom would apparently be interested in accelerating the sale of its mobile telephone towers in Europe, with the aim of cutting debt. There are 40,600 towers (30% of Cellnex’s towers including BTS growth programmes). The price, according to press reports, could be around 18 billion euros (>60% of Cellnex’s current market cap). Amongst possible suitors would be Cellnex’s competitors like American Tower. It already has a presence in Germany after buying Telxius’ towers, Vantage (Vodafone affiliate) and Totem (Orange affiliate).
Valuation: The prices per tower mooted in the press would be higher than in other acquisitions made by Cellnex, like that of Hutchinson, in line with its buy of Altice in France, an EV/EBITDA of around 20x according to German firm’s latest results. This does not compare with Cellnex’s last acquisitions of between 12x and 13.5x EV/EBITDA run-rate (taking into account expansion plans).
We cannot quite see Vodafone or Orange’s affiliates being successful in the process, as they are direct competitors of Deutsche Telekom. That said, it will depend on the price they are prepared to pay. For that reason we are inclined to think the transaction could be between Cellnex and American Tower.
For Cellnex, the operation would be completely transformational. It would allow it to enter some geographical areas where it is not present, such as Germany, Hungary or Greece. Whatsmore, it would strengthen its presence in other countries like Poland, Sweden or Austria. In this respect, Cellnex had 8.6 billion euros in liquidity at end-2021, of which 4.7 billion correspond to non-disposable credit lines. So we believe that in the event it acquires all the towers, Cellnex would have to call on the market via a capital increase (besides this deal, we recall that it has a pipeline of projects close to 9 billion euros). We do not rule out Cellnex not buying all the towers and deciding on some specific geographic locations, in function of its strict criteria for profitability required in this type of operation which could lead it to ruling out others.