EUR 200.00 For Business Accounts Only

CELLNEX: DEAL WITH DTE IN THE NETHERLANDS (ANÁLISIS BANCO SABADELL)

 CLNX has reached an agreement with Deutsche Telekom (DTE) to integrate the latter’s 3,150 towers in the Netherlands, and thus CLNX will operate 4,314 towers in the country (including the deployment of 180 BTS). The agreement will have a 15-year duration with automatic renewals of 10 years (and with an “all or nothing” clause). The division’s EBITDA will total € 63 M (+42% vs. the Netherland’s current EBITDA and 5.6% of CLNX’s total EBITDA’20e) and RLFCF € 30 M (4.9% of the total). A new company will be set up, CLNX Netherlands, where CLNX will hold 62% and DTE 38%. In order to adjust the valuations of the two assets (CLNX’s and DTE’s towers), we must bear in mind that the group consolidating Cellnex includes € 250 M of debt that will belong to the newly-created Cellnex Netherlands. According to these terms, the implied valuation for both assets is similar (they generate similar pre-IFRS16 EBITDA levels, as CLNX’s towers have a far higher tenancy ratio).
 Moreover, it has reached an agreement for the creation of a DIV Fund (Digital Infrastructure Vehicle 1SCSp) that would be managed independently and which would search for investment in digital infrastructure in Europe (fibre, towers, and data centres). CLNX will contribute € 200 M for the creation of this fund (controlling a 33%), whereas DTE will provide € 400 M (through CLNX Netherlands’ 38% stake, and CLNX will have a right to co invest with a 51% stake in any arising opportunities that are related to its core assets, such as pylons, small cells, rooftops, BTS programmes, etc.
MARKET IMPACT
The initial reading of this agreement is positive for two main reasons: (i) it allows the company to strengthen and consolidate operations in the Netherlands, maintaining its neutrality, (ii) it does not mean a significant economic outlay (only a € 250 M increase in debt,