Scarcely a week goes by without new developments in the cell tower industry, with current activity being led by Europe. Just a week after Orange put its towers and other cell sites into a new company called Totem, and Vodafone confirmed plans to IPO its own captive towerco, Vantage, their biggest pure-play rival in Europe, Cellnex, added to its growing empire. The company, is acquiring Polkomtel Infrastruktura in Poland, adding to tower assets it is buying in the country from mobile operator Play, and taking it further into the realm of active networks.
Spain-based Cellnex will buy the infrastructure arm of Polkomtel from Cyfrowy Polsat for €1.6bn, and has committed a further €600m to building or acquiring new sites in the country.
The transaction will add 7,000 towers and a range of active assets to Cellnex’s rapidly growing portfolio. The latter include about 37,000 2G/3G/4G/5G radios, about 11,300 kilometers of fiber backbone, and fiber and microwave backhaul networks across Poland. Cellnex has pledged to invest €600m in 1,500 additional sites and active assets (mostly 5G) during the next 10 years.
The deal is particularly interesting because it adds to Cellnex’s repositioning as an ‘augmented towerco’ – one that does not just operate passive sites such as towers, roofs and city furniture, but also provides neutral host services in active networks, in-building networks, fiber, and potentially cloud infrastructure.
Although towercos express strong interest in diversification, in reality, only a small number have done this aggressively so far, with Crown Castle in the USA and Cellnex in Europe being the best examples. Cellnex already has a wide range of “adjacent assets” under its control, including broadcasting infrastructure, subway networks, data centers and fiber.
“Our expansion into active infrastructure is undoubtedly a qualitative leap and heralds a new reality for the company that broadens the development and growth options for Cellnex in Europe within telecommunications infrastructures,” said CEO Tobias Martinez, though he also acknowledged that active networks force towercos to adapt to more complex processes, platforms and customer relationships.
The Polkomtel deal is Cellnex’s second major European acquisition in the past month, following a deal for Deutsche Telekom’s towers in The Netherlands. In November 2020, it announced an agreement to acquire CK Hutchison’s sites in Austria, Ireland, Denmark, Sweden, Italy and the UK for a total of €10bn.
Cellnex is now in a very strong position in Poland, with Polkomtel (which operates under the Plus brand) as a new anchor tenant, and its existing relationship with Play. That resulted from a deal, signed last year, to take a majority stake in a company set up to own and manage Play’s 7,000 sites. Once both Polish deals are closed, Cellnex will have more than 14,000 existing sites, plus transport infrastructure and active network assets, and aims to build more than 6,000 additional sites across the country.
The closing of outstanding acquisition deals, and the completion of all pledged site additions, will bring Cellnex’s total European portfolio to 128,000 sites within a decade, which would double its base and put it in a commanding position even as Vantage and other carved-out towercos start to expand their reach to new service providers and asset types.
Maciej Stec, VP of strategy at Cyfrowy Polsat – which is selling the Polkomtel assets but will continue to run Polkomtel Plus – said: “We believe active and passive network sharing is crucial for the provision of mobile connectivity in the future and mobile players have to follow this direction in order to provide high end user experience.”
Cellnex also announced its 2020 full year financial results. It reported revenues up 55% year-on-year to €1.6bn and raised its forecast for 2021 to between €2.405 and €2.445bn, prompting a 5.7% leap in its share price to €44.94. Its EBITDA almost doubled to €1.18bn but costs, many related to M&A, pushed it into a net loss of €133m.
At the end of 2020, the company had 58,014 operating sites
- Austria 4,470
- Denmark 1,317
- France 10,312
- Ireland 1,781
- Italy 10,610
- The Netherlands 924
- Portugal 5,052
- Spain 10,327
- Switzerland 5,315
- The UK 7,996
It also has 3,004 DAS (distributed antenna system) and small cell nodes, an increase of 25% year-on-year.