Cellnex Telecom SA, Europe’s largest telecom tower operator, is planning to focus its future takeover efforts on “adjacent” infrastructure after losing out on what would’ve been its biggest-ever deal.
(Bloomberg) — Cellnex Telecom SA, Europe’s largest telecom tower operator, is planning to focus its future takeover efforts on “adjacent” infrastructure after losing out on what would’ve been its biggest-ever deal.
“We see deals happening in ‘adjacent’ infrastructure, the infrastructure in proximity to towers,” Alex Mestre, the Barcelona-based company’s deputy chief executive officer, said in an interview.
“There have already been some deals of this type in the industry, but there will be more and of larger scale. We expect to see this in the next few years.”
Those deals might be for assets including fiber optic cables that carry signals to and from the towers, small data centers and so-called central offices.
More assets of this kind are going on sale across Europe as firms shift to asset-light models, Mestre said. For Cellnex, the key will be deals that allow it to offer more services to existing tower partners, he said, adding that the company is not interested in direct-to-consumer business.
In July, Cellnex dropped out of the race to buy a stake in Deutsche Telekom AG’s tower unit, a long coveted target that would have been the takeover-hungry company’s largest deal ever.
The deal would have also given Cellnex access to the only major European market where it isn’t present. The company is also unlikely to bid for a stake in Vodafone Group Plc’s unit Vantage Towers AG, which has a strong German presence, people familiar have said.
The Spanish mast operator decided to pull out of the Deutsche Telekom auction when it became clear that the German carrier was interested in selling to a financial investor.
Cellnex wants to control and operate its assets, and consolidate them in its earnings, Mestre said.
In the absence of large tower assets for sale in the foreseeable future, Cellnex, which has been built on a strategy of making acquisitions to gain scale, has had to find a new path forward.
The company has spent more than €20 billion ($19.6 billion) on deals since its share listing, according to data compiled by Bloomberg. While shares have nearly tripled since the initial public offering, the stock is down about 40% this year.
“We will always seek to have a certain balance, with towers representing the bulk of our infrastructure, but the rest will grow,” Mestre said, adding that the company still forecasts a number of smaller tower deals potentially happening in Europe.
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