Spanish infrastructure operator Cellnex has agreed to acquire the European tower business of CK Hutchison, parent company of mobile operator 3 Group, for a total consideration of EUR 10 billion, confirming recent reports. The transaction is the largest in the history of Cellnex, boosting its towers footprint by around 40 percent beyond 100,000 sites and allowing it to enter new markets including Austria, Denmark and Sweden while consolidating its foothold in Italy, the UK and Ireland.
Deal covering nearly 30,000 sites
In a statement, Cellnex said it agreed to pay EUR 8.6 billion in cash for the CK Hutchison Networks unit plus EUR 1.4 billion in shares representing a stake equivalent to around 5 percent of the Spanish company. The six transactions involve the acquisition of around 24,600 sites plus the rollout of up to 5,250 sites over the next eight years. Upon completion, Cellnex will have around 103,000 towers and telecommunications sites, enhancing its position as the continent’s largest mobile towers company following recent deals in France and Italy (Iliad), Switzerland (Salt), the UK (Arqiva), Ireland (Cignal), Spain (Orange), Portugal (OMTEL) and Poland (Play). It will fund the EUR 8.6 billion cash payment using existing cash and available liquidity.
Cellnex added that once the planned rollouts including third party tenants and efficiencies are completed, the transactions will add an estimated EBITDA of around EUR 970 million to the consolidated group and free and recurring cash flow (RLFCF) of around EUR 620 million, with annual revenues increasing by EUR 1.2 billion to EUR 3.8 billion. The partners will also sign long term service contracts for an initial period of 15 years, extendable for an additional 15 years.
In terms of markets, 8,900 of the total of 24,600 sites to be acquired are located in Italy, 6,000 in the UK, 1,150 in Ireland, 2,650 in Sweden, 1,400 in Denmark and 4,500 in Austria. As for the 5,250 additional sites to be rolled out over the next eight years, Cellnex expects to install 1,100 new sites in Italy, 600 in the UK, 100 in Ireland, 2,550 in Sweden, 500 in Denmark and 400 in Austria.
Accelerated 5G rollout
Hong Kong-based CK Hutchison has been working with advisers to spin off its European towers as a separate subsidiary since revealing plans to create a new infrastructure unit for its 28,500 European masts over a year ago. In a statement, the company said it was pleased to gain a long-term partner in Cellnex while unlocking value in its telecom assets. It said the deal would serve to improve the group's operational efficiency and accelerate 5G rollout in the markets covered.
The series of transactions are subject to formal closing conditions including regulatory clearance and are expected to complete on a staggered and per country basis over the next 18 months, said the partners.
