By Douglas Busvine
BERLIN (Reuters) – Cellnex, the Spanish telecoms infrastructure company, would be interested in buying into Telefonica’s mobile towers business should the opportunity arise, CEO Tobias Martinez said on Thursday.
The expression of interest by Martinez came after Telefonica Chief Operating Officer Angel Vila said the company would consider relinquishing control to give its Telxius subsidiary more headroom to grow.
“My wish is always to acquire the towers of all of the telecom operators. Why not? It’s my core business!” Martinez told the Morgan Stanley Technology, Media and Telecom conference.
Cellnex has, through a string of audacious deals, emerged as the leading candidate to roll up European tower assets being cast off by operators trying to raise capital to pay for costly network upgrades to launch 5G services.
The Barcelona-based company has just pulled off its biggest acquisition to date by buying 24,600 towers across Europe from Hong Kong’s CK Hutchison for 10 billion euros ($11.83 billion).
Pure-play towers operations are able to crank up financial leverage to acquire infrastructure assets that produce predictable and growing revenue streams as data volumes grow – an approach applauded by investors who have sent Cellnex shares up by 45% this year.
Some other telecoms operators are looking to get in on the act, with Vodafone planning to float its Vantage Towers operation on the Frankfurt Stock Exchange next year after carving it out into a separate business.
UP AND DOWN
Cellnex’s equity market value of around 24 billion euros now exceeds that of Telefonica, whose shares have dropped this year as its weak operating performance raised questions over its ability to support a debt pile of 43 billion euros.
Vila, speaking at the Morgan Stanley conference on Wednesday, said Telefonica would consider reducing its stake in Telxius below half – a move that would give the business more scope to leverage up and do deals.
“If you have restriction on leverage that independent towercos don’t have, it is very difficult to grow inorganically,” Vila said.
“We are open to potential options that could take us below 50% of Telxius towers provided those allow the company to develop and grow faster.”
Telefonica owns Telxius along with private equity firm KKR and Zara owner Amancio Ortega’s investment fund Pontegadea.
“My personal ambition would obviously be to find a way to cooperate or to invest,” Martinez said, when asked to respond to Vila’s comment. He added, however, that no talks were yet taking place: “I don’t want to speculate.”
($1 = 0.8453 euros)
(Additional reporting by Mathieu Rosemain and Isla Binnie. Editing by Jane Merriman)
