Company Reports

Cellnex is Europe's largest independent tower firm. Since its inception, Cellnex’s strategy was to acquire European wireless tower portfolios from mobile network operators and lease the towers back to those MNOs while adding other tenants to take advantage of the towers’ operating leverage. MNOs find value in Cellnex’s proposition as they can monetize towers at good valuations and use the proceeds to reduce debt. Transactions are structured as sale/leaseback and provide Cellnex with long-term revenue and cash flow visibility, underpinned by 10- to 25-year contracts, which include annual rent escalators often tied to inflation.

Cellnex's second-quarter results were in line with the company-compiled consensus, reaching revenue of EUR 1.01 billion and adjusted EBITDAaL of EUR 636 million. Second-quarter EBITDAaL margin expanded 270 basis points to 63.0% thanks to organic growth and management of land purchases and leases.

Cellnex's first-quarter results were in line with company-compiled consensus, reaching revenue of EUR 984 million and adjusted EBITDAaL of EUR 595 million. EBITDAaL margin expanded 170 basis points to 60.5%, thanks to land renegotiation and purchases.

Cellnex is Europe's largest independent tower firm. Since its inception, Cellnex’s strategy was to acquire European wireless tower portfolios from mobile network operators and lease the towers back to those MNOs while adding other tenants to take advantage of the towers’ operating leverage. MNOs find value in Cellnex’s proposition as they can monetize towers at good valuations and use the proceeds to reduce debt. Transactions are structured as sale/leaseback and provide Cellnex with long-term revenue and cash flow visibility, underpinned by 10- to 25-year contracts, which include annual rent escalators often tied to inflation.

Cellnex set 2026 in motion with a new organizational plan to boost organic growth and operational efficiency. The changes will mainly focus on how Cellnex’s internal business units are organized geographically.

Cellnex's third-quarter results were in line with guidance and company-compiled consensus, with revenue up 5.7% and EBITDA after leases up 7.5% year to date.

There were no surprises in Cellnex’s second-quarter results, with management reiterating their 2025 guidance of EUR 3.95 billion-EUR 4.05 billion in revenue with adjusted EBITDA of EUR 3.28 billion-EUR 3.38 billion.

We are updating our long-term view on wireless tower operator Cellnex.

Cellnex is Europe's largest independent tower firm. Since its inception, Cellnex’s strategy was to acquire European wireless tower portfolios from mobile network operators and lease the towers back to those MNOs while adding other tenants to take advantage of the towers’ operating leverage. MNOs find value in Cellnex’s proposition as they can monetize towers at good valuations and use the proceeds to reduce debt. Transactions are structured as sale/leaseback and provide Cellnex with long-term revenue and cash flow visibility, underpinned by 10- to 25-year contracts, which include annual rent escalators often tied to inflation.

Cellnex reported revenue and EBITDAaL of EUR 954 million and EUR 558 million in the first quarter, a 4.9% and 7.9% increase, respectively. Management maintained its 2025 guidance of EUR 3.3 billion to EUR 3.4 billion in adjusted EBITDA.

Cellnex Telecom’s 2024 revenue reached EUR 3.94 billion, with fourth-quarter numbers above company-compiled consensus in all metrics. Full-year revenue increased 7.7%, driven in equal amounts by co-location and build-to-suit growth. Adjusted EBITDA after leases of EUR 2.39 billion climbed 10% and expanded 160 basis points to a 60.6% margin, as Cellnex has focused on staff reductions and land lease management, an effort that we appreciate and that will continue in 2025. Cellnex adjusted its 2027 guidance after the disposal of Ireland and Austria and now expects EUR 3.74 billion in 2027 adjusted EBITDA (at the midpoint) compared with EUR 3.9 billion previously. We are maintaining our EUR 52 fair value estimate and narrow moat rating.

Cellnex is the main pure independent tower firm of large scale in Europe (Inwit and Vantage Towers are not fully independent as they are controlled by mobile network operators). Since its inception, Cellnex’s strategy has been to acquire European wireless tower portfolios from MNOs and then lease the towers back to those MNOs while adding other tenants to take advantage of the towers’ operating leverage. MNOs find value in Cellnex’s proposition as they can monetize towers at good valuations and use the proceeds to reduce debt. Transactions are structured as sale and leaseback and provide Cellnex with long-term revenue and cash flow visibility, underpinned by its contracts (10- to 25-year durations), which include annual rent escalators often tied to inflation.

Narrow-moat Cellnex's revenue and EBITDAaL have grown by 7.4% and 9.8% year to date, respectively. EBITDAaL reached EUR 1.72 billion, a 59.3% margin, expanding 100 basis points year over year. Year to date, 53% of tower revenue growth has come from low-capital-expenditure activities like co-location and price escalators, while the remaining 47% has come from build-to-suit activities, which are more capex intensive. Long term, we expect the former to represent a larger chunk of revenue, which we like. Cellnex is slowly but steadily improving its tenancy ratios, having grown from 1.39 times in the beginning of the year to 1.41 times currently, and growing annual revenue per tower to EUR 27,700 from EUR 26,700 a year ago. We are maintaining our EUR 52 fair value estimate and see the shares as undervalued.

Cellnex’s management remains active on its divestment strategy, announcing that it is in advanced negotiations to sell its Austrian business. The sale price will likely be lower than the EUR 1.1 billion Cellnex paid in 2021 for this asset, given Cellnex just reported a EUR 311 million goodwill and intangible asset impairment on it. Proceeds will be used for share repurchases, which we believe investors have welcomed, sending the shares up 4%. Buybacks make sense to us at this point, since we think the shares are undervalued. Just like the recent sale of the Ireland business, we believe the sale of the Austria asset is proof that Cellnex’s prior management went too far with acquisitions, sometimes acquiring subpar assets. The organic performance of the Austrian business has been very poor during the past four years, with tenancy ratios flat at 1.15 times, a number we don’t consider enough to generate excess returns on invested capital. We are maintaining our EUR 52 fair value estimate and narrow moat rating.

Narrow-moat Cellnex performed nicely in its first quarter with strong colocation growth that drove tenancy ratios up and expanded the EBITDA after leases margin by 130 basis points year on year to 56.5%. Revenue grew 7.5% organically, 4.3% of which came from low capital-expenditure activities, colocation, and escalators. Italy and Portugal were the standouts given they have intense competition among mobile operators, with tenancy ratios expanding to 2.15 and 1.77 times respectively, from 2.05 and 1.67 last quarter. We maintain our EUR 52 fair value estimate and shares offer an important upside. Investors might need to be patient as we don’t see any imminent catalysts. Cellnex's share price is sensitive to changes in interest rates given its high leverage, so a potential reduction in interest rates could aid the share price and bring it closer to our fair value.

Cellnex is the only pure independent tower firm of large scale in Europe (Inwit and Vantage Towers are not fully independent as they are controlled by mobile network operators). Since its inception, Cellnex’s strategy has been to acquire European wireless tower portfolios from MNOs and then lease the towers back to those MNOs while adding other tenants to take advantage of the towers’ operating leverage. MNOs find value in Cellnex’s proposition as they can monetize towers at good valuations and use the proceeds to reduce debt. Transactions are structured as sale and leaseback and provide Cellnex with long-term revenue and cash flow visibility, underpinned by its contracts (10- to 25-year durations), which include annual rent escalators often tied to inflation.

Narrow-moat Cellnex met its full-year guidance, with revenue of EUR 3.7 billion and free cash flow of EUR 150 million. The firm reported EBITDA after leases for the first time, which we view as favorable as it is a better reflection of economic reality for a tower firm than EBITDA. Its EBITDAaL grew by 17% for the full year compared with revenue growth of 15%, suggesting little margin expansion. Although Cellnex tenancy ratios are improving in selected locations like Portugal and Italy, which is good for margin expansion, organic colocation remains very weak in markets like Austria, Sweden, and Ireland. Cellnex’s build-to-suit programs remain intense, with 4,473 new tower sites in 2023, which also creates dilution in tenancy ratios. The group’s tenancy ratio has improved to 1.39 tenants per tower compared with 1.35 one year ago, mainly driven by improvements in Italy and Portugal. We assume Cellnex’s tenancy ratios will improve gradually to around 1.8 times by the end of the decade, resulting in a steady EBITDAaL margin improvement. We maintain our EUR 52 fair value estimate.

Cellnex is the only pure independent tower firm of large scale in Europe (Inwit and Vantage Towers are not fully independent, as they are controlled by mobile network operators). Since its inception, Cellnex’s strategy has been to acquire European wireless tower portfolios from MNOs and then lease the towers back to those MNOs while adding other tenants to take advantage of the towers’ operating leverage. MNOs find value in Cellnex’s proposition as they can monetize towers at good valuations and use the proceeds to reduce debt. Transactions are structured as sale and leaseback and provide Cellnex with long-term revenue and cash flow visibility underpinned by its contracts (10- to 25-year durations), which include annual rent escalators often tied to inflation.

There were no surprises in narrow-moat Cellnex’s third-quarter results. Revenue has grown by 16.9% in the first nine months of the year, with EBITDA after leases up 20%. Cellnex is finally experiencing slight operating leverage, with EBITDAaL margins up 140 basis points year over year. However, we want to see an even stronger focus on organic growth (co-location) as Cellnex needs to improve its tenancy ratios to make the most out of the tower firm operating model. Last quarter new CEO Marco Patuano gave encouraging remarks during Cellnex’s earnings call that indicated a new focus on co-location growth. Co-location growth has been softer this quarter compared with the previous one, with 582 new co-locations compared with 1,255 in the previous quarter. However, co-location growth has indeed been quite strong in the previous four quarters. Cellnex’s tenancy ratio stands at 1.38 tenants per tower, compared with 1.36 a year ago. We are maintaining our EUR 52 fair value estimate.

After a long stretch of overvaluation, sentiment around the wireless tower industry has swung the other way. Each of the five independent tower firms we cover globally is now undervalued relative to our fair value estimates and trading in a 4- or 5-star range. Though the stocks have been volatile, especially around interest rate movements, we haven’t seen much change to the companies’ fundamentals. We believe tower firms have long-term secular tailwinds, great business models that include contractual recurring revenue with annual escalators, and narrow moats. In our view, the market has presented a compelling opportunity.