Cellnex's revenues in 2016 grow by 15%, exceeding initial estimates by 23%

Broadcasting infrastructures (235 million) contribute 33%, while 12% (87 million) comes from the provision of network services.

Cellnex Telecom has presented the results corresponding to the end of the 2016 financial year. Revenues amounted to 707 million euros (+15%) and EBITDA reached 290 million (+23%), above estimates for the year that placed EBITDA growth between +15% and +20%. The comparable net result reached 40 million euros (+38%) compared to 29 million at the end of 2015.

Tobías Martínez, CEO of Cellnex, has valued “the consistency of results that, 20 months after Cellnex's listing on the stock market, have allowed us every quarter to fulfill the commitment we assumed both in terms of organic and inorganic growth.” Regarding business operations, it stands out as "the results of 2016, on a constant basis, confirm a year-on-year growth of +4% in the number of devices (points of presence) deployed in the sites operated by Cellnex. Quarter after quarter we have increased the number of devices that we host for our clients by more than 200." This has been reflected in the improvement in the sharing ratio, which has reached 1.62 per location compared to 1.53 in 2015.

"This organic growth must also be projected on a perimeter that continues to expand, providing the company with greater potential. I find it relevant to highlight that the company has practically doubled its income in the last 4 years and expanded its presence to five countries, which represents a very relevant quantitative and qualitative change. This is a project in which its presence in different markets in which our clients also operate, and scale, constitute key factors for the sustainability of the business model," adds Martínez.

"As important as gaining the necessary dimension and scale is the integration of this growth into the day-to-day life of the company, in the management processes, ensuring compliance and quality in the service to our clients. Together with the inorganic growth we demonstrate to the market that we are capable of continuing to take advantage of the potential for organic growth of our service portfolio," says the CEO of Cellnex.

En relación a las operaciones de crecimiento realizadas durante el ejercicio, José Manuel Aisa, director financiero y de M&A de Cellnex Telecom, ha subrayado como “los 700 millones de euros invertidos en 2016 en Italia, Francia, Holanda y Reino Unido, junto a los 700 ya invertidos en 2015 en el portafolio de emplazamientos de WIND, y los 854 millones del reciente acuerdo firmado este 1 de febrero con Bouygues Telecom, dan cuenta del dinamismo que vive el sector en Europa. Es además una muestra del atractivo del modelo de operador neutro de infraestructuras y amplía la base de grandes proveedores de acceso a la red en Europa con los que Cellnex va asentando una colaboración y partenariado a largo plazo. Se suma a ello la alianza estratégica que acabamos de cerrar días atrás con JCDecaux para combinar nuestras capacidades en Italia y España aportando soluciones que aceleren el despliegue y densificación de tecnologías como los sistemas distribuidos de antenas (DAS) o las “small cells”, que en el futuro van a mejorar de modo decisivo la calidad y capacidad de la cobertura en banda ancha móvil en áreas urbanas y espacios con grandes aglomeraciones.”

Growth by business lines

By business lines, Telecommunications Services and Infrastructure contributed 55% of revenues with 385 million euros, a growth of 27% compared to 2015, reflecting the combination of organic growth and expansion of the perimeter.

Activity in audiovisual broadcasting infrastructures and services contributed 33% of revenues with 235 million euros, up 4.5% compared to 2015, already reflecting the positive impact of the incorporation of 6 new TV channels in Spain since the end of April 2016.

While the business focused on security and emergency networks and solutions for the intelligent management of urban infrastructures (IoT and Smart cities) contributed 12% of revenues with 87 million euros, +2% compared to the end of 2015.

As of December 31, 2016, Cellnex Telecom had a total of 16,828 sites (7,739 in Italy, 7,415 in Spain, 725 in Holland, 371 in France and 578 in the United Kingdom), to which are added the 1,072 nodes (DAS and Small Cells) managed by CommsCon in Italy and which have grown by +13% since the acquisition of the company in June 2016.

The organic growth of the points of presence in the locations at constant perimeter stood at +4.5% in relation to the end of 2015, while the ratio of customers per location reached 1.62x, up from 1.53x in December 2015 (+6%). This is a reflection of commercial activity, with the closing of new service provision agreements with mobile telephone operators and telecommunications operators and audiovisual communication groups in both Italy and Spain.

Investments during the period exceeded 700 million euros: 19 million correspond to the acquisition of CommsCon in Italy; 109 million for the purchase of the 261 Protelindo sites in Holland; 147 million for the 500 Bouygues Telecom towers in France; and 393 million allocated to the acquisition of Shere Group, which has provided 1,004 new locations (540 in the United Kingdom and 464 in the Netherlands).

78 million were applied to the maintenance of installed capacity, as well as to investments linked to the generation of new income and improvements in efficiency such as the improvement of operating costs due to the renegotiation of contracts related to the locations in which the mobile telephone infrastructure managed by the company is located, 995 renegotiations in 2016.

Debt structure

As of February 2017, Cellnex maintains a stable, long-term debt structure, with an average life of 7 years, an approximate average cost of 2%, and 86% referenced to a fixed rate. Cellnex Telecom's debt is not subject to any type of covenants.

On August 1, 2016, the company issued a Corporate Bond for 750 million euros maturing in January 2024 and a coupon of 2.375%. It was Cellnex's second issuance in the debt markets after the Bond issued in July 2015 for an amount of 600 million euros and maturing in 2022. In December 2016 Cellnex closed the private placement among qualified investors of a 16-year bond for 65 million euros and a coupon of 3.875%. This past January Cellnex issued a fourth bond for an amount of 335 million euros, a coupon of 2.875% and maturity in 2025.

“The combination of Cellnex's access to the capital market, treasury and available credit lines total availability as of February 2017 of 1.8 billion euros, and guarantees the company's execution capacity in the face of growth opportunities, extends the maturity profile of its debt and takes advantage of the current low interest rates, anticipating the upward movements that may occur,” says José Manuel Aisa, the company's financial director. Cellnex does not face significant maturities until 2022 when the bond issued in July 2015 matures.

The company's net debt as of December 31 reached 1,499 million euros compared to 927 million at the end of 2015, an increase of 572 million that reflects the growth operations closed in the year for an amount of 670 million. The annualized net debt/EBITDA ratio stood at 4.6x compared to 3.7x in December 2015. In this sense, José Manuel Aisa highlights the company's “capacity for deleveraging which, given the strong generation of cash flows, can reduce its debt, at constant perimeter, by a ratio of 0.6x each year.”

On March 30, 2016, Cellnex Telecom was added to the list of corporate bonds eligible as collateral by the European Central Bank in monetary policy operations. This action is part of the framework of the corporate debt purchase program (Corporate Sector Purchase Programme, CSPP), which on March 10, 2016 completed the financial asset acquisition program (Asset Purchase Programme, APP) previously deployed by the ECB.

Las emisiones de Cellnex Telecom mantienen el rating “investment grade” (grado de inversión) de Fitch (BBB- con perspectiva estable), confirmado por la propia agencia días atrás después de informar de las nuevas inversiones previstas en Francia. Asimismo el pasado 15 de febrero S&P confirmó el “rating BB+ con perspectiva también estable.

Perspectives 2017

Beyond the operations that imply an expansion of the group's consolidation perimeter – such as the agreement reached this February with Bouygues Telecom and whose visibility in 2017 will still be limited taking into account the execution horizon of 2 years (incorporation of 1,800 sites) and 5 years (construction of 1,200) –, the forecasts for 2017 based on the current perimeter point to a growth in free cash flow recurring above 10%, while EBITDA will be in a range between 330 and 340 million euros. The dividend will grow 10% compared to 2016.

Regarding the axes of Cellnex Telecom's organic growth, it will focus on a rationalization of redundant sites (up to 2,000 between 2016 and 2019), construction in coordination with network access operators of new sites in areas that require it (up to 2,200 in the period 2016-2021); and an annual growth in the number of points of presence (PoPs) in the company's locations – at constant perimeter – by 3%-4% in the period 2016-2019.