First part of the year with Cellnex’s new strategy and the trends are confirmed: upward organic growth and total revenues with downward increases, in the absence of large corporate operations that add more telecommunications towers to their portfolio. The first six months of the year culminate in the ‘tower’ with 17% more total sales and more losses after amortizations. The company has raised the debt to 17,900 million euros and maintains the forecast of reaching positive cash flow at the end of this year.
Specifically, the manager now led by Marco Patuano has closed the first six months of the year with a rise in revenues up to 17%, exceeding the barrier of 2,000 million euros. These rates are lower than those of the previous stage, marked by the continuous incorporation of new towers and assets that were consolidated in the perimeter. In the first quarter the increase was 19%, so the pace continues to slow down due to this change in strategy, which seeks to boost organic growth.
That organic growth, which is generated through existing assets, continues to gain some traction. In the first quarter it was almost 7%. In the first six months, it is 7.1%, somewhat higher. This is one of the main objectives set by the new management team. “All our strategic pillars – focus on organic growth, discipline in investments and efficiencies – are confirmed,” said Patuano.
Despite the fact that this strategic shift has been carried out, there are still trends in the income statement from the previous era of higher growth based on acquisitions. Specifically, higher depreciation (+16%) and financial costs (+13%) have led to consolidated net losses rising again during the period to €193 million compared to €170 million in the previous period.
The company maintains the objective of generating positive free cash flow by the end of this year. In these first six months, this has gone from the negative 739 million a year ago to about 130 million in this first half of 2023. At this point, the relevant investment (674 million euros) in the construction of new towers linked to the signing of commercial agreements with the operators has been key. This point, that of cash flow, is one of the most relevant to achieve the main short-term objective for the company: to maintain Fitch’s investment grade, confirmed in February, and get S&P to do the same.
To achieve this milestone, the reduction of net debt will also be relevant, which has increased significantly in recent years due to this aggressive strategy of acquiring towers and other assets from telecommunications operators. This liability, excluding rents, stood at 17,900 million euros compared to 17,000 million at the end of the year. The company highlights that it has 3,700 million of liquidity and 76% is linked to fixed interest rates.
