Spanish operator Cellnex Telecom has announced the creation of a consortium to acquire 100 percent of Swiss Towers AG, a subsidiary of Sunrise Communications that operates 2,239 telecommunication sites in Switzerland. The consortium led by Cellnex will acquire Swiss Towers for a total of EUR 430 million free of cash, pushing the total number of towers operated by Cellnex in Spain, Italy, Switzerland, France, Netherlands and the UK to over 23,000. The consortium is 54 percent owned by Cellnex, 28 percent by Swiss Life Asset Managers and 18 percent by Deutsche Telekom Capital Partners.
In a statement, Cellnex CEO Tobias Martinez said the deal represents a strategic leap forward for the company, converting it into the first independent operator of services and infrastructure for mobile telecommunications in Switzerland. He said the Swiss market is facing the challenge of meeting the significant growth in mobile data consumption and transmission by incorporating new technologies based on small cells and distributed antenna systems (DAS). "In the medium term this will mean densifying networks by rolling out new equipment in parallel with reducing the overlap of some of the already rolled out networks, essentially 2G and 3G. This market development provides a clear opportunity for Cellnex Telecom," he added.
Swiss Towers operates 2,339 sites throughout Switzerland, with a greater presence in the cantons of the north and west of the country. Around a third of the sites are located in urban areas and two-thirds on rooftops, offering ideal conditions for the future roll-out and densification of equipment associated with 4G and 5G, said Cellnex.
Completion of the deal is subject to merger control clearance and the conclusion of transitional service agreements, based on which Sunrise will provide certain transitional services to Swiss Towers, as well as a build-to-suit agreement, based on which Sunrise is subcontracted to build new telecom towers.
Sunrise said it plans to use CHF 450 million of the proceeds from the sale to pay down debt, with the aim of soon reaching an investment-grade credit rating. Based on end-2016 numbers, this would reduce its leverage from 2.7x adjusted EBITDA to 2.1x. The remaining proceeds will go to network investment, fibre partnerships and its shops, resulting in one-off capex of additional CHF 30 million in 2017. The sale is expected to have little impact on revenues this year, but will reduce EBITDA to CHF 577-592 million from a previous estimate of CHF 595-610 million.
The improved balance sheet also led to an increase in its dividend outlook. The company now targets a dividend of CHF 3.90-4.10 per share this year, a 17-23 percent from 2016 and a meaningful step up from previous guidance of CHF 3.45-3.55. Sunrise’s revised dividend policy is to pay out at least 65 percent of equity free cash flow, rising to 85 percent once the company's net debt ratio is below 2.0x.
