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UPDATE 2-Cellnex to grow existing markets after failed DT towers bid

UPDATE 2-Cellnex to grow existing markets after failed DT towers bid

Reuters · 07/28/2022 02:12
UPDATE 2-Cellnex to grow existing markets after failed DT towers bid

H1 core earnings up 59%

Net loss doubled to 170 million euros

Recasts with comments from chief executive

By Joan Faus

- Spain's Cellnex CLNXF said on Thursday it would consolidate and expand in its 12 existing European markets after a failed bid for Deutsche Telekom's (DT) DTEGY towers business.

Europe's largest mobile phone tower operator withdrew an offer for a stake in the DT business earlier this month. The 51% stake was clinched by Brookfield and DigitalBridge in a deal that valued the business at 17.5 billion euros ($17.9 billion).

The deal would have allowed Cellnex to enter Germany.

"Our financial package was super competitive," chief executive Tobias Martinez told analysts on a results call, there were doubts about a return on the investment.

"The main issue was the lack of strategy fit and the lack of capacity (handed to) Cellnex in order to consolidate and run the assets, and to run company, which for us is a must," he added.

Under the winning bid, DT will continue to run the business and has the right to regain control and reconsolidate it in the future.

Many telecoms firms have carved out towers businesses, or launched joint ventures, as a way to raise money, while keeping a stake to benefit from any future growth.

Cellnex raised capital in April 2021 and gave itself 18 months to invest in acquisitions. Martinez said the company would extend that period after failing to clinch the DT deal, but did give a timeframe.

Cellnex, which has 104,000 masts, reported first-half core earnings of 1.28 billion euros, up 59% year-on-year, benefiting from its expansion and rising revenue. The company kept its 2022 outlook.

However, its loss doubled to 170 million euros due to higher amortisation and costs from its 2021 acquisitions.

At 0930 GMT, Cellnex shares were down 3.5%.

For 2022, the company expects adjusted earnings before interest, tax, depreciation and amortisation to increase to 2.65-2.7 billion euros, and revenue of 3.46-3.51 billion.

In the first half, revenue grew 59% to 1.69 billion euros as its of masts increased by 27%.

Its financial debt in June was 14.3 billion euros versus 11.9 billion at the end of 2021. Available liquidity is 7.6 billion euros.

($1 = 0.9887 euros)

(Reporting by Joan Faus
Additional reporting by Andres Gonzalez and Tiago Brandao
Editing by Inti Landauro and Mark Potter)