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Continued robust delivery of services underpins Cellnex performance in Q1

Posted by Cellnex Telecom

Cellnex Telecom has presented its results for the first quarter of 2020.  Revenues amount-ed to €358 million (+49%) while EBITDA grew to €260 million (+64%) after consolidating asset acquisitions made in 2019 in France and Italy (Iliad), Switzerland (Salt), the UK (BT), Ireland (Cignal) and Spain (Orange), as well as the purchase of OMTEL in Portugal, finalised on 2 January 2020.

Net profit for the quarter was – €30 million due to the substantial effect of higher amortisations (91% vs. Q1 2019) and financial costs (34% vs. Q1 2019), associated with the intense acquisition process and the consequent geographic footprint expansion. This scenario remains consistent with the current strong growth that the company continues to experience and, as announced in the presentation of annual results, we can expect the group to continue to show a negative accounting result in the coming quarters.

Franco Bernabè, Chairman of Cellnex, underlined the “continuity and full availability of the services that Cellnex provides in the eight countries in which we operate, against the backdrop of social and economic disruption resulting from the coronavirus outbreak.”

“The Company –Tobias Martinez, Cellnex’s CEO added–,  is operating under the criteria of maximum responsibility and prudence in relation to our customers whose services have been unaffected; to our suppliers, to whom we have offered mechanisms to speed up receipt of payments for services and supplies;  and to our employees, who we continue to support and who provide continuity of operations of the company. We are also proud to have been able to commit financial and technological resources to social projects projects to alleviate the impact of the health crisis in the short term.”

In this context, continues the CEO, “we can underscore a first quarter whose results include the effect of both business continuity with sustained like-for-like growth and the significant expansion of the Company due to the acquisitions undertaken in 2019 and these first months of 2020, which has translated into substantial growth in revenue, EBIDTA and recurring cash flow.”

Business lines. Main indicators for the period

In the first quarter of 2020, Infrastructure services for mobile telecommunications operators contributed 76% to total revenues, to the tune of €273 million, an increase of 71% compared to March 2019.

Activity in broadcasting infrastructures contributed 17% of revenues, at €59 million.

The business focused on security and emergency service networks and solutions for smart urban infrastructure management (IoT and Smart cities) contributed 7% of revenues, totalling €25 million.

As of 31 March, 62% of revenues and 71% of EBITDA are generated outside the Spanish market. Italy is the sec-ond largest market, accounting for 23% of the group’s revenues.

As of 31 March 2020, Cellnex had a total of 40,207 operative sites (10,284 in Spain, 10,194 in Italy, 9,325 in France, 921 in the Netherlands, 608 in the United Kingdom, 5,270 in Switzerland, 594 in Ireland and 3,011 in Portugal), plus a further 2,053 nodes (DAS and Small Cells).

It should be noted that the number of DAS and Small Cells sites grew approximately 25% in comparison to the first quarter of 2019.

Like-for-like organic growth of points of presence in sites was up c.5% year on year, while the customer ratio per site (excluding changes to the perimeter) was up by c.3%.

Total investments executed in the quarter amounted to €919 million, mostly for investments linked to generating new revenue streams, particularly the incorporation of new assets in Portugal and the continued integration and roll-out of new sites in France, as well as improvements in efficiency, and maintenance of installed capacity.

The backlog of future contracted sales of the group stands at €46 billion.

Debt structure

Cellnex closed the first quarter of 2020 with a stable long-term debt structure, with an average life of 5.6 years, an average cost of approximately 1.7% (drawn debt), and 77% at a fixed rate.

The Group’s net debt as of 31 March stood at €4.569 billion compared to €3.938 billion at the close of 2019.

At the close of the period, Cellnex also had access to immediate liquidity (cash + undrawn debt) to the tune of approximately €6 billion.

Cellnex Telecom’s bond issues maintain their “investment grade” rating from Fitch (BBB- with a stable outlook), confirmed by this agency in April this year. For its part, S&P maintains the BB+ rating with stable outlook confirmed by the agency also in the April.

First months of 2020 marked by growth operations

In the first months of 2020 Cellnex reached a series of growth agreements through which it entered and consoli-dated its position in Portugal – the eighth European country in which the company operates – and strengthened its presence in France by rolling out a fibre optic network with Bouygues Telecom, which will connect towers, sites and edge computing centres that are key to developing the 5G ecosystem.

In Portugal the company announced in January that it had closed the purchase of the Portuguese telecommunications towers and sites operator OMTEL for €800 million. OMTEL operates 3,000 sites in Portugal. The acquisition also envisages the roll-out of 400 new sites over four years, which could be completed with a further maximum 350 sites, involving a total planned investment for this site construction programme of €140 million.

In April, Cellnex reached an agreement with the Portuguese mobile operator NOS to acquire 100% of NOS Towering. The transaction involves c.2,000 telecommunications sites and an initial investment of approximately €375 million, with an additional investment commitment of up to €175 million to expand the geographic footprint (by up to 400 sites, including a new tower construction programme) and other agreed initiatives to be performed during the next six years. The closing of this acquisition is subject to the usual regulatory and administrative approvals.

In France, Cellnex and Bouygues Telecom announced a strategic agreement in February to deploy and operate a fibre optic network to support and speed up the roll-out of 5G. The planned investment – up to 2027 – is €1 billion, which will be used to roll out a 31,500 km network that will interconnect the telecommunications towers that serve Bouygues Telecom – 5,000 of which belong to Cellnex – with the network of “Central” and “Metropolitan offices” for housing data processing centres (Edge Computing). The agreement also envisages the deployment of up to 90 new “metropolitan offices”, also up to 2027, in addition to the 150 centres agreed with Bouygues Telecom (88 in December 2018 and 62 in February 2019).

In the UK, in April the company received the necessary approval from the Competition and Markets Authority (CMA) to acquire Arqiva’s telecommunications division. The project, which was announced in October 2019, will involve integrating c. 7,400 sites and the marketing rights of c. 900 sites across the UK, involving an investment of £2 billion. Following the CMA’s authorisation, initial forecasts indicate that the transaction will close by next summer.

Cellnex and the coronavirus crisis

From the outset of the coronavirus outbreak, Cellnex, as an operator of telecommunications infra-structures for radio and TV (DTT), voice and data, and communication networks for security forces (police and fire-fighters) and emergencies (medical and maritime rescue), has deployed its contingency and business continuity plans accross the eight countries in which it operates in order to preserve the security and availability of the services it provides 24/7 while ensuring application of the strictest protection measures for its staff.

Likewise, the Company is cooperating with various national and international organisations, particularly the Spanish Red Cross, Unicef, Save the Children and Italy’s Protezione Civile to provide personal protective equipment for healthcare staff as well as resources for at-risk groups. The company is also working together with several hospitals and is contributing to a technological project to develop, produce and provide mechanical ventilation systems for ICUs.

―CT Bureau

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