Cellnex On Cusp Of $11.7B Telecom Deal With CK Hutchison

Spain’s Cellnex Telecom said it is in advanced talks with CK Hutchison to explore potential deals and scenarios of strategic collaboration worth about 10 billion euros ($11.7 billion).

Madrid-based Cellnex (CLNXF) said the potential economic terms and conditions, as well as the structure of the transaction are still being negotiated and, therefore, no binding agreement has been reached so far. In a separate statement, CK Hutchison said that it has reached “substantial agreement” on the key commercial terms for the sale of its interests in telecommunications infrastructure assets in Europe, to Cellnex.

Upon completion of the transaction, the group would enter into service agreements with Cellnex for the latter to provide telecom infrastructure services and to support an accelerated 5G network rollout through a committed built-to-suit expansion program.

Cellnex, which describes itself as the main infrastructure operator for wireless telecommunication in Europe, provides services in Italy, Netherlands, United Kingdom, France, Switzerland, Ireland, Portugal and Spain. Among Cellnex’s shareholders are Blackrock and Wellington Management. (See CLNXF stock analysis on TipRanks)

The transactions, which are still subject to final approval, are expected to generate total proceeds of 10 billion euros, including minority partners’ share, CK Hutchison said. Hong-Kong-listed Hutchison has five core businesses – ports and related services, retail, infrastructure, energy and telecomms.

“However, no decision has been taken to proceed with any transaction and there can be no certainty that any transaction will proceed or, if it does, what the scope or terms of such transaction would be,” CK Hutchison said in a statement.

Cellnex shares have already surged 48% so far this year. From Wall Street analysts, the stock scores a Moderate Buy consensus based on 4 Buy ratings versus 2 Hold ratings. Meanwhile, the $69.35 average analyst price target indicates another 8.2% upside potential lies ahead over the coming 12 months.