Cellnex’s first major divestment operation in its strategy to reduce debt and improve its financial rating. The telecommunications infrastructure manager has closed an agreement with the international fund Stonepeak for the sale of 49% of the subsidiaries in Sweden and Denmark for approximately 730 million euros. The valuation is very relevant despite the adjustments experienced in the sector. Final completion is expected in the first quarter of 2024 after achieving regulatory authorizations.
The tower manager has been analyzing for months the possibility of providing funds within the shareholding of some of its subsidiaries in smaller markets. The objective was none other than to try to “crystallize value” by bringing in money in order to reduce debt and ingratiate ourselves with the rating agencies. The one announced this Friday is the most relevant that has occurred in this new deleveraging strategy that Marco Patuano is now executing.
On this occasion, a new joint company is created in which the Spanish company will have control and 51% of the shares and the StonePeak fund will have 49%. In exchange, the latter will put on the table 688 million euros of ‘fixed’ -558 million at closing and 130 three years later- and about 40 million euros of what is known in slang as ‘earn out’, that is that is, a variable based on a series of parameters. Specifically, it will be paid when the Swedish purchase option (negotiated with Hutchison to acquire up to 1,400 towers) scheduled for 2026 is executed.
Valuation is a relevant aspect in this type of transactions. On this occasion, the rate with respect to Gross Operating Profit (EBITDA) expected for 2024 is approximately 24 times, according to Constancia the Manager of Torres El Hecha HO RELEVANT COMMUNICATION THIS SDAY BEFORE the National Securities Market Commission (CNMV). Despite the adjustment experienced in the sector in recent quarters, this is a relatively high level.
What is the exact size of the assets sold? Cellnex provides mobile operators in the Nordic countries with colocation services for their wireless communication equipment through a network of 4,557 sites spread across Sweden and Denmark. The company has commitments and options to build and operate approximately 2,500 additional sites in the region, which will allow it to continue growing organically.
The management and governance structure leaves control to the Spanish, although with ‘winks’ to the Americans. Cellnex will appoint the management team, although with consultation with Stonepeak. As for dividends, it is expected that these will be distributed proportionally to the shareholders’ shares based on the available cash and the results of the business plan “with preferential treatment” to the fund in the case of a negative deviation with respect to the Roadmap. The planned design in 2024 corresponding to the participation of the international firm is approximately 24 million euros (with an annual growth of 5% after 2024).
