The deal
The recently announced sale of 100% of Cellnex’ business in Ireland to Phoenix Tower International for EUR 971mn, an equivalent to a multiple of approximately 24x EBITDAaL, comes as no surprise.
Under its new CEO Marco Patuano, the company has focused on reducing its leverage ratio below six times its core earnings. In order to improve its credit rating and reduce its leverage the towerco has started to sell assets.
Commenting on the deal, Marco Patuano has said that “the sale of our business in Ireland – at an appropriate valuation – is one further step within the company's ‘Next Chapter’, in line with our strategy, to achieve the goal of consolidating, simplifying our corporate structure and focusing our efforts in the existing growth opportunities in the main markets in which we operate.”
Cellnex’ Irish portfolio comprises of just under 2,000 towers and it will use the proceeds of this deal to reduce its debt. The closing of this transaction is subject to regulatory approvals.
Following the same strategy, in September 2023, Cellnex sold a 49% stake in its Nordic operations to Stonepeak for EUR730mn. The deal closed at the end of 2023 and includes approximately 4,600 sites across Sweden and Denmark.
The Irish market
There is a long tail of towercos operating on the market. At present, tower ownership across Ireland looks as follows:
Cellnex has been present in Ireland since 2019 when it acquired the telecoms infrastructure from Cignal in an EUR 210mn deal. As tower build-to-suit (BTS) costs have increased by approximately 30% since, offloading the towers will also support the towerco’s Next Chapter direction which aims for efficient operations improving EBITDAaL margins to 64% by end of 2027.
Following the disposal of the Irish assets, Cellnex will still be the biggest towerco in Europe with 105,000 sites.
In his comment about the deal PTI CEO Dagan Kasavana has said “we are delighted to announce this strategic transaction with Cellnex after a successful transaction in France which signifies a significant step forward in Phoenix Tower International's expansion in Europe. This acquisition demonstrates our commitment to Ireland, and we are eager to contribute to the development of robust and advanced telecommunications infrastructure that will benefit both the Irish people and our valued Mobile Network Operator partners.”
Once completed, the deal will make Phoenix Tower the biggest towerco in the country. The company is already present there with 913 towers.
In May 2020, MNO eir signed a deal to sell its portfolio of 650 sites to PTI for EUR300mn. The deal also included a BTS commitment with PTI expected to add up to 800 new sites for the operator.
While many towercos focus on larger sale and leasebacks, PTI has proven comfortable taking on small portfolios and growing them to something more substantial. One recent example is from just under half a year ago, when PTI set foot in another European country following a small towerco acquisition in Germany.
PTI is present in 22 markets across Europe, the United States, Latin America and the Caribbean and with the acquisition it will operate almost 24,000 towers worldwide.
In addition, following the remedies established by the French Competition Authority (FCA) as a result of Cellnex’s purchase of Hivory in 2021, PTI is also expected to acquire more towers in France this year. Cellnex has agreed the sale of 3,226 sites to PTI and at present 2,353 sites have changed hands and are owned by PTI. The deal is expected to close later in 2024, strengthening PTI’s position in Europe even further.
What could we expect next?
At its Capital Markets Day on 5th March, the towerco announced a change of direction - having grown through acquisitions since listing in 2015 and large investments, it will focus on driving industrial value, securing healthy growth and yield. “In Ireland and Austria we are considering the possibility of a full disposal,” said Patuano back in 2023 and now with the Irish business transaction being announced, we’re yet to see if Cellnex’ presence in Austria will be monetised in 2024.
The recent transaction is just one of a handful of other tower transactions in the Irish market, most
notably the acquisition of 340 masts from Eircom (owners of eir) by Towercom back in 2007.
In July 2023 investment firm John Laing acquired Towercom for an undisclosed amount. The transaction included Towercom’s 409 sites and was part of a larger infrastructure deal also comprising real estate assets worth EUR1bn in total. This is the second KKR-owned telecom infrastructure company in the country – the first being Vantage Towers who are co-managed by a consortium consisting of the investor and the second being Towercom whose new owner is also KKR-owned.
