The result adds pressure on the infrastructure group to continue exploring asset sales to cut debt
Europe’s largest operator of towers and telecom infrastructure Cellnex Telecom reported a flat net loss for FY2023, despite revenue rising to €4.05 billion (up 16% YoY), as higher costs impacted the company. Given its well-publicised intention to gain an investment-grade credit rating by S&P – stated in 2022 and forecast to take a 12-24-month period from then – the company said it continues to look at potential asset sales. Net financial debt amounts to €17.3 billion. Currently 76% of the debt is tied to a fixed rate.
Earlier this week it was revealed that Global Infrastructure Partners and the infrastructure arms of KKR and Macquarie Group are considering the purchase of a stake in Cellnex’s Polish operations. EQT and Antin Infrastructure Partners were also reportedly circling the Polish unit. A potential deal could value Cellnex Poland at as much as €4bn, according to Bloomberg.
The company only gained full control of its Polish subsidiary last year after acquiring a 30% stake from Iliad as part of a €510m deal. Last September, Cellnex sold a 49% stake in its Nordic business (in Sweden and Denmark) to Stonepeak for €730m and its assets in Republic of Ireland and Austria are potentially up for grabs. All eyes will now be focused on the company’s 5 March capital markets day where it said it will share details on its strategic priorities and outlook for the near and medium term.
Cellnex also closed the agreement to sell its private networks business unit to Boldyn Networks, primarily comprising Edzcom, the group’s Finnish subsidiary specialised in connectivity solutions for private networks in industrial complexes and environments.
More on the results
In FY23, Cellnex posted a net loss of €297 million as higher amortisation and finance costs. EBITDA increased 14% to €3.01 billion and was driven by organic growth (+6.4%) and consolidation of the company’s geographic footprint. The company saw a positive free cash flow of €150 million following an outflow of €1.12 billion in 2022. Amortisations (+10% vs 2022) and financial costs (+11% vs 2022), both associated with the assets acquired by the group, caused the €297 million loss. Cellnex also reduced net debt by €200 million QoQ.
This was mainly due to the effect of the sale of sites in France, after enacting the French Competition Authority (FCA) remedies following the company’s purchase of Hivory in 2021, following the sale of 2,353 sites to Phoenix Tower International (PTI) and the joint venture of PTI and Bouygues Telecom. Cellnex received €631 million for the sale of these assets, to which it plans to add an additional €360 million – after finalising the transfer of the approximately 870 remaining sites – in 2024.
Cellnex chair Anne Bouverot said 2023 was a year of transformation for the company after it announced it had entered the “next chapter” of integrating its many acquisitions. “In March, the board appointed me as its chairperson and in June, Marco Patuano was appointed as our new CEO at the annual shareholders meeting,” she said. “Since then, the company has strengthened the execution of this next chapter, by giving more accountability to the countries with a new organisational model, by realizing some selective disposals, and by continuing to deliver strong financial results”.
Cellnex CEO Marco Patuano (above) added: “In 2023, Cellnex delivered excellent commercial performance and consistent operational execution, with revenues and EBITDA well on track and our free cash flow turning positive earlier than anticipated. We have been able to meet our financial targets as well as industrial KPIs, thanks to both a smart control of CAPEX expenditure and a strict and disciplined control of our cost structure. Throughout the year we made good progress on reducing debt thanks to the disposal of sites in France and the deal in the Nordics with Stonepeak.”
Business line indicators
Cellnex said infrastructure services for mobile telecommunications operators (its TIS business) contributed 91% to revenue (€3.7 billion), up 16% on 2022. The broadcasting infrastructure business contributed 6% of revenue, with €230 million. Its business focused on security and emergency service networks and solutions for smart urban infrastructure management (MCPN and IoT and Smart cities) contributed 3% of revenue, totalling €138 million.
As of 31 December, Cellnex had a total of 113,175 operational sites (without taking into account the 16,080 sites forecast for the rollout up to 2030): 23,737 in France, 22,160 in Italy, 16,040 in Poland, 13,218 in the United Kingdom, 10,535 in Spain, 6,541 in Portugal, 5,487 in Switzerland, 4,616 in Austria, 4,104 in the Netherlands, 3,114 in Sweden, 1,985 in Ireland and 1,638 in Denmark; plus 9,678 DAS nodes and small cells.
Organic growth of points of presence at the sites was up 6.4% in relation to 2022, with 2% from new colocations in existing sites, leading to a total of 4,688 – with Portugal and Italy standing out in this area – and 3.2% coming from the rollout of 4,473 new sites in this period, mainly due to the progress made in the built-to-suit programmes in France, Italy and Poland.