Cellnex Nears $12 Billion Tower Unit Deal With CK Hutchison

(Bloomberg) -- Billionaire Li Ka-shing is closing in on a sale of his European telecommunication towers to Spain’s Cellnex Telecom SA for about 10 billion euros ($11.7 billion).

Li’s Hong Kong-based conglomerate CK Hutchison Holdings Ltd. has reached a “substantial agreement” on terms but hasn’t taken a final decision, according to a filing Wednesday. Cellnex separately confirmed the talks that Bloomberg News reported last month, without disclosing a value.

CK Hutchison is the latest mobile network operator to carve out mast infrastructure to cut debt and help pay for costly 5G network upgrades. Cellnex is snapping up a chunk of those assets, making it one of the fastest-growing players in Europe’s telecom industry.

Hutchison previously considered selling a minority stake in the new unit, CK Hutchison Networks, which has 28,500 towers spread across Europe. Buying it outright is preferable for an independent tower company like Cellnex as it makes it easier to sell capacity to multiple wireless operators on a single mast.

Cellnex shares rose 4.7% as of 12:02 p.m. in Madrid. The announcement came after Hong Kong trading closed.

Selling all of the tower business would also raise more money for CK Hutchison, whose Chairman Victor Li -- the elder son of the senior Li -- is seeking ways to conserve cash and get more value from the group’s assets. The company has warned of further profit declines at its ports and retail businesses in the second half of 2020 amid the coronavirus pandemic.

The group, which reported a 29% slump in first-half net income, has seen its stock tumble 35% this year.

Barcelona-based Cellnex’s growth trajectory has put its shares among the best performers in Europe’s telecom sector. The company, Europe’s largest wireless tower operator, has expanded its footprint with deals in Portugal and Poland this year and raised about 4 billion euros in July to fund more acquisitions.

A deal would bring it towers in countries including the U.K. -- where CK Hutchison has an infrastructure joint venture with BT Group Plc -- Ireland and several countries where Cellnex doesn’t have a presence, such as Sweden.

Cellnex shares have risen 58% this year, giving it a market value of about 27.5 billion euros, making it the strongest performer on the Stoxx Europe 600 Telecommunications Index, which has fallen 21%.

CK Hutchison said the proceeds of a European mast sale would be split with the unit’s minority partners.

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