• EDUARDO FERNÁNDEZ

    @eduardfdz

    Madrid

Monday, October 21, 2019 - 01:43

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  • Telecommunications Cellnex buys towers from Arquiva and is already the second 'telco' infrastructure operator in the world
  • Infrastructures MásMóvil shoots 21% after reaching an agreement with Orange to share networks

That a Spanish company invests in the United Kingdom of Brexit apparently disobeys the normal flow of the business flow. Nor is it customary for a homeland company to lead a technology-related field in Europe, in this case independent telecommunications infrastructures, and only comparable to those of US giants. Cellnex, the Ibex firm that has revalued the most so far this year, is based in the European Union, including the United Kingdom, in the face of recommendations such as that of Minister Reyes Maroto, who has advocated "reducing dependence" on Companies in that market.

The company led by Tobías Martínez has become strong in these islands with a massive acquisition of antennas, 8,300 in the last purchase, to add 53,000 locations throughout the continent. Cellnex had already settled in British lands, through two agreements with Shere Group and BT, and still aspires to more, for example to provide coverage on buses and the London underground.

The new incursion by the domains of Boris Johnson takes into account the possible currency fluctuations, in the so-called hedging strategy, but in Cellnex they look "in the medium and long term, at 20 and 25 years seen", as they explain to Actuality Economical from the company based in Barcelona. "Whatever happens in London, it is the second European economy," recalls a director of the firm. In February, Cellnex launched a capital increase of 1,200 million , and this month it has undertaken another for 2,500 million ... and has reached its historical maximum on the stock market, after doubling the value in 2019.

It all started in the summer of 2014, when Francisco Reynés , then CEO of Abertis, and Tobías Martínez, at that time CEO of Abertis Telecom, proposed a project to maximize the value of what at that time was only a branch of the company, as Professor Jordi Canals recounts in an IESE case study. Cellnex was running to serve the telephone companies, thanks to the infrastructure and signal transport. Abertis Telecom focused its work on broadcasting, for example of Telecinco, Antena 3 and TVE (the Pirulí belongs to Cellnex), but that business had clear limitations; indeed, it meant around 9 out of 10 euros admitted, and today I would hardly inject two. The attention turned to voice and data. You had to call the phone companies.

Despite the complexity of its activities, Cellnex's business is easily explained: in the future with greater communications weight, infrastructure will be needed to support them, for example, towers such as those bought last week by the English company, Arqiva, for 2,240 million euros. The 5G, the mobile phone standard that in 2023 will have already upset the current 4G and that in Spain is commercially available since last summer (at the moment only for Vodafone customers), will inevitably need infrastructure operators, in addition to the popular operators mobile phones

CONNECTED CITY

This deployment includes antennas, but also the so-called small cells: in the smart city (or smart city ), more citizens will be connected to the network and each of them will put more data into circulation; already in homes, where the internet of things (IoT) will be imposed, appliances will communicate with each other and respond to any indication made from the phone. A device in a lamppost may alert a vehicle to the appearance of a pedestrian around the corner, but this will require a network and connection points. Cellnex is running to provide them.

Orange and MásMóvil have signed an agreement this month to share networks that triggered the price of the latter in the Ibex, 21.2% during the day of the announcement. Also this year, Orange and Vodafone have intensified their synergies in Spain, which have lasted for more than a decade. Last July, Vodafone and Telefónica agreed to a joint network deployment precisely in the United Kingdom.

That is, infrastructure is so relevant for 5G that operators are willing to park their rivalries in order to move forward. In Cellnex they have noticed this and that a neutral operator, as is the case, treasures the ability to agree with any of the aforementioned telephone companies, as well as with administrations or with companies that wish to deploy their own industrial networks. On one side of the pros, there are also cons: "4G has not yet been amortized and has already become obsolete. In addition, in the development of 5G, administrations can agree with leading manufacturers in deployment, such as Huawei, and dispense with other type of operators, network and mobile, "warns a specialist from the Official College of Telecommunications Engineers.

In favor of Cellnex plays the fact that some operators, such as Telefónica itself, have been forced to part with infrastructure , important assets but in the end the core of their business does not reside; in this way, they relieve debt, reduce expenses, improve profitability and prepare for future investments. It is not necessary to climb a tower to distinguish the large disbursements that 5G will require.

Financial Times recently announced that Telefónica has hired Goldman Sachs to advise on the sale of up to 50,000 towers of the Spanish multinational, which in turn participates in Telxius, dedicated to the infrastructure of the sector. Other telephony giants, from the British Vodafone to the German Deutsche Telekom , have also released assets. This outsourcing had already been carried out in the US in the first two thousand years. Europe catches up and Cellnex takes advantage of it.

Standard and Poor's has encrypted this scenario, in which the metallic brightness not only corresponds to the reflections of the steel of the towers: the potential value of the telecommunications assets of European operators reaches a huge amount of 90,000 million.

Height

Cellnex, which provides for a workforce of 1,500 employees and revenues of 1,500 million within a couple of years, is already the largest independent telecommunications infrastructure operator in Europe and, thanks to its latest operation, also the second in the world. It would only be surpassed by American Tower and has already surpassed Crown Castle, in addition to being above the American SBA and the Italian Inwit.

The 53,000 locations covered by Cellnex will find a relevant competitor when Vodafone has just developed TowerCo, which aims to bring together 61,700 infrastructure points as of May, with 75% of its assets distributed in four fundamental markets such as Spain, Italy, the United Kingdom and Germany (The latter country is currently resisting Cellnex). "With the TowerCo model, we seek to maximize the efficiencies derived from the specialization in the business of the towers, maintaining control of them and guaranteeing the deployment of Vodafone radio operators and, finally, with them the monetization of investments through the entry of third parties in the shareholding, "argues a director of Vodafone. "The dominant operators, to create value and increase revenue, would choose to share assets or create mobile phone tower companies owned," Barclays said in a recent report.

So far this year, Cellnex has doubled its price: it has revalued from 20 euros per share to around 40 ; No other Ibex firm has progressed at this rate. The company adds and continues: Fitch agency said last week that, after the acquisition of the Arqiva telecommunications division, Cellnex "will improve its geographical diversification" and generate "strong" cash flows. The expansion continues, with the standards of Cellnex nailed in Italy, France, Spain, United Kingdom, Switzerland, Ireland and Holland, ordering these countries from greater to lesser number of infrastructures.

Last year, the company entered 901 million, although it lost 15 million. The market capitalization of the company today exceeds 12,200 million.

Cellnex, with no trace of Abertis in its holdings, has ConnecT as its main shareholder, with 29.9%. Within ConnecT are the Benettons (55%), the sovereign wealth fund of Singapore and that of Abu Dhabi (each with 22.5%).

The reception of the new capital increase invites optimism: 36% of the shareholders have already pledged to attend the meeting , including ConnecT and the directors in possession of titles. The subscription period ends on Friday. Cellnex is enlarged, even more, but still does not want to set limits on its perimeter.

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