Marco Patuano celebrates two months at the helm of Cellnex Telecom. The favorite of the TCI fund, Christopher Hohn’s investment vehicle, to succeed Tobías Martínez as advisory delegate of the telecommunications tower manager takes 60 days. A period in which the company’s price has remained relatively stable until a week ago, when the market turmoil has affected its price. After these corrections, its annual revaluation slightly exceeds 16.5%, up to 36 euros per title, with a potential twelve-month period with which it can run almost 40%.
The tower is currently trading at the level of 36 euros per share, although it corrects 40% from the maximums at which it moved in August 2021. Thus, it appears as the third value of the entire Ibex 35 with the lowest margin of 12-month journey, according to the ‘Bloomberg’ consensus. Only Acciona (+54.5%) and Acerinox (+46.9%) are ahead. Prospects that are reinforced by starting out as one of the favorite values of the index in the eyes of investment banks. More than seven out of ten analysts recommend buying it and none is betting on getting rid of it, a trend that has remained stable since April.
The resignation of Martínez and the governance crisis derived from the search for a successor led analysts to review Cellnex downwards and increase the advice to hold from 14% in January to the current figure. With the uncertainty about who would take the reins cleared up, the analysis houses have endorsed their support for the company in the ‘Patuano era’ which is now immersed in the search for a new financial director after the announcement of the resignation of José Manuel Aisa last Sunday.
The departure of this executive from Abertis, which has played a key role in the growth of the Spanish listed company, represents a change of course within the company, which faces among its most urgent challenges complying with the roadmap established at the end of 2022. Specifically, the script focuses on debt reduction, investment grade consolidation with S&P before
“We hope that it will study the possibility of divesting itself of assets that are not essential or will not have the capacity to grow,” they point out from Barclays. In this sense, one of the first decisions that Patuano has taken upon arrival has been to acquire the 30% stake that the French operator Iliad owned in the Polish On Tower Poland for 510 million, in such a way that it has come to have absolute control over the firm. From Cellnex they argued that this operation was an intermediate step in their process of exploring strategic options and that it would also help speed up obtaining the aforementioned investment grade next year.
Deutsche Bank analysts, who are critical of this decision, do not see it that way. “Although we see the strategic logic for Cellnex to acquire 100% of the assets, the timing is unfortunate given the emphasis on deleveraging and achieving a credit rating,” they point out, to point out that “the ideal” would be to have freed up capital with the sale of a minority stake to finance the acquisition. “This now puts pressure on Cellnex and could question the structure of the rest of the assets in which there are minority partners,” he says.
In this regard, analysts believe that Cellnex will take longer than expected to put its deleveraging strategy on track. The latest semi-annual results show an increase in leverage to 17,900 million compared to 14,300 million recorded in the same period of 2022, of which three quarters are referenced to a fixed rate. Financial costs, which have risen by 13%, continue to weigh on the company, as does the greater growth through purchases, as reflected in its income statement despite this change of direction, leading the company to increase its numbers reds until close to 200 million.
Facing this second part of the year, the ‘Bloomberg’ consensus estimates that the red numbers will increase and exceed 254 million with a stable revenue volume, slightly above 2,000 million. From Barclays they emphasize the need to reduce leasing costs and give an example of Patuano’s strategy in TIM, which through Inwit, the wireless network infrastructure subsidiary that it owns jointly with Vodafone Italy, which has reduced expenses through this route. A formula that he considers he could now emulate at Cellnex to improve operations. The greatest opportunity for cuts is in the United Kingdom and the Netherlands, as well as in Spain, where last May they announced an ERE that affected more than 50 people.
