Cellnex Steps Up Expansion With $2.5 Billion U.K. Tower Deal
Cellnex to Buy Arqiva's Telecom Towers in $2.5 Billion Deal
(Bloomberg) -- Cellnex Telecom SA is buying Arqiva’s U.K. telecommunication towers for 2 billion pounds ($2.5 billion) and selling new shares to help the fast-growing Spanish infrastructure company pursue more deals.
In one of its biggest acquisitions to date, Cellnex will acquire 7,400 mobile towers that privately-held Arqiva is carving out from its broadcasting mast business. The transaction makes Cellnex Britain’s biggest independent wireless tower operator and a central player in the country’s rollout of faster 5G mobile technology.
“The company is actively evaluating market opportunities for an estimated aggregate size of approximately 7 billion euros,” Cellnex said in presentation slides published as it announced the deal. It said some of those opportunities are at an early stage, while others are being negotiated exclusively with the seller or are already signed.
Tens of thousands of European towers are set to change hands in coming years as phone carriers sell stakes in their fixed assets to reduce debt and shoulder the cost of 5G deployment. Infrastructure funds have been big buyers as the sector offers stable returns over many years, pushing up the value of the assets.
Cellnex, Europe’s largest independent mobile mast owner, is also piling in. The Barcelona-based company has bought more than 10,000 towers in France, Italy, Switzerland and Ireland since May. In June it acquired commercial and operation rights on 220 towers owned by Britain’s BT Group Plc. That growing scale has boosted its earnings prospects, sending its shares up 80% this year.
Cellnex stock rose as much as 4.6% on Tuesday to a record high before paring the gain to trade up 2.2% as of 10:06 a.m. in Madrid.
The company is issuing a syndicated loan worth 2 billion pounds and new stock at 28.85 euros a share in a rights issue to raise a further 2.5 billion euros ($2.7 billion).
What Bloomberg Intelligence Says:
More transactions seem likely as carriers dealing with Cellnex can achieve more desirable cash-flow profiles, based on economies of scale and reduced regulatory barriers.
-- John Davies, BI TMT analyst
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The Arqiva purchase also gives Cellnex commercial rights over a further 900 tower sites, and concessions to use London street infrastructure as locations for mobile equipment. The deal is subject to clearance by antitrust authorities and Cellnex expects it to close in the second half of 2020.
The next U.K. asset that could be on Cellnex’s radar is Cornerstone, a joint venture between Telefonica SA’s O2 and Vodafone Group Plc that owns more than 20,000 tower sites. The two agreed in June on a plan to roll out 5G across their networks, moving a step closer to a potential sale of the venture.
To contact the reporter on this story: Thomas Pfeiffer in London at tpfeiffer3@bloomberg.net
To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net, Jennifer Ryan, Frank Connelly
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