Spain’s Cellnex Seals $11.8B Telecom Tower Deal With CK Hutchison

Cellnex announced that it will buy 24,600telecom towers and sites that Hong Kong’s CK Hutchison currently owns in Europe for a total consideration of €10 billion ($11.8 billion).

Madrid-based Cellnex (CLNXF) said the transaction agreement also includes the roll-out of up to 5,250 network mast sites over the next eight years, with a planned investment of about €1.4 billion. As a result of the deal, the mobile phone mast operator will generate an estimated additional EBITDA of about €970 million, while free and recurring cash flow will grow by about €620 million.

According to the financial terms of the deal, Cellnex pay €8.6 billion in cash and issue €1.4 billion in new shares, and in return, CK Hutchison will own a 5% stake in Cellnex. In terms of sales, the company’s turnover is set to increase by €1.2 billion to €3.8 billion, following the completion of the planned launches.

“The transformational nature of the agreements, which strengthens Cellnex’s position as one of the main Europe-wide telecommunications infrastructures operator, with a portfolio of c. 103,000 sites once the transactions and rollouts are complete,” Cellnex Chairman Franco Bernabè commented. “We will now be present in three new significant markets – Sweden, Austria and Denmark – and will further build upon our role as a key operator in three of our core markets, namely Italy, the UK and Ireland.”

The transaction will extend Cellnex’s geographic footprint to a total of 12 European countries. In addition, the company will sign long-term service contracts with CK Hutchison in the various countries for an initial period of 15 years, which will be extendable for another 15 years and subsequent 5 years.

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

Cellnex shares have surged 42% so far this year. From Wall Street analysts, the stock scores a Strong Buy consensus based on 6 Buy ratings versus only 1 Hold rating. Meanwhile, the average analyst price target stands at $74.43, indicating another 15% upside potential lies ahead over the coming 12 months.