Cellnex: On both sides of M&A table?
Cellnex’s equity story in 2018 should be dominated by M&A, with it possibly being on both sides of the negotiating table. There are apparently two large M&A targets available: an Inwit sale seems to be back on the table and Altice is looking to sell its towers in France and Portugal. In our opinion, Cellnex could be a bidder for both assets with estimated valuations of up to Eur 5bn and a capital increase would almost certainly be required for any of these (up to Eur 2bn/each). Cellnex is also reported to be a target for American Tower (Bloomberg, 31/5/2017), which could be the main reason for the +58% ytd return on the shares. While we do not rule out the possibility of a takeover, at the current valuation the risk seems skewed to the downside and we continue to see the shares as being expensive on a stand-alone basis: after the rollover to 2018 our FV is now Eur 14.3/sh (+Eur 0.6/sh), with 33% downside. We thus reiterate our SELL recommendation.Cellnex Telecom SA is a Spain-based company engaged in the wireless telecommunications (telecom) business. Its activities are divided into three segments: Broadcasting infrastructure, Telecom site rental, as well as Network services and other. The Broadcasting infrastructure division comprises distribution and transmission of television (TV) and frequency modulation (FM) radio signals, operation and maintenance (O&M) of radio broadcasting network, as well as over-the-top (OTT) radio services, among others. The Telecom site rental division provides access to wireless infrastructure, primarily through infrastructure hosting and telecom equipment co-location, mainly for mobile network operators and other wireless and broadband telecom network operators. The Network services and other division offers connectivity services for a variety of telecom operators and radio communication, among others. The Company also develops 5th generation mobile networks (5G) through Alticom BV.
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