Major Tower Operator Faces Hiring Dilemma as CEO Who Piloted Growth Departs

With the architect of Cellnex Telecom SA’s emergence as Europe’s biggest tower operator set to exit the stage, the board must choose between hiring outside talent or naming an experienced insider to consolidate the Spanish firm’s growth.

(Bloomberg) — With the architect of Cellnex Telecom SA’s emergence as Europe’s biggest tower operator set to exit the stage, the board must choose between hiring outside talent or naming an experienced insider to consolidate the Spanish firm’s growth.

Tobías Martínez, who piloted Cellnex’s explosive expansion after its 2015 stock listing, will leave in June, the company said on Wednesday. The executive spent more than €23 billion ($25 billion) on acquisitions and the share price more than doubled.

Whoever takes over the reins from Martínez, 63, faces a tough task after the easy financing conditions that made its metamorphosis possible evaporated last year as central banks began to hike interest rates. Cellnex has already said its days of debt-fueled growth via acquisitions are behind it as it makes achieving an investment-grade rating its top priority.

The appointment of a new chief executive officer “goes someway towards convincing the market that Cellnex is serious about this strategic pivot,” Jerry Dellis, an analyst at Jefferies, said in an interview. “If it is someone external, then clearly there is a break from the past, but equally I think it would be possible to argue that the CFO was a driving force behind the strategic change,” he said, in reference to Chief Financial Officer José Manuel Aisa.

The company’s shares rose as much as 0.8% to €31.77 in Madrid on Friday.

A spokesperson for Cellnex declined to comment.

Cellnex’s deal-making heyday already looked to be slipping into the past last year as large buying opportunities started to dry up. In July, it dropped out of a race to nab Deutsche Telekom AG’s towers in what could have been its biggest-ever deal, and in November it missed out on a chance to buy Vodafone Group Plc’s masts unit. 

The main challenge for Martínez’s successor will be to deliver impressive results while the company takes a different strategic tack, said Ricardo Seixas, head of Iberian equities at Bestinver Asset Management.

‘Obvious’ Candidates

While the market might value “obvious” internal candidates such as Deputy CEO Àlex Mestre or CFO Aisa, “they are also described as people who are experts in inorganic growth, in the M&A market, in integration,” Seixas said. The alternative option would be to tap someone with proven management control skills who won’t rely on acquisitions to expand the firm’s footprint, he said.

The board’s search for a replacement, coincidentally, starts around the same time as it awaits a periodic assessment of management done by head-hunting firm Russell Reynolds.

Cellnex has said it aims to be rated investment grade by S&P Global Ratings in 12 to 24 months. The company, with more than €17 billion of debt, already has an investment grade rating from Fitch.

Born in 2015 from the spinoff of the telecommunications arm of the Abertis infrastructure group, Cellnex operates nearly 105,000 sites across 12 countries, up from some 15,000 around the time of the initial public offering. 

In recent years, Cellnex has sought new revenue sources by expanding into infrastructure connected to masts, ranging from fiber-to-tower and small data centers to more complex assets such as radio equipment and antennas.

“If you’re increasing the number of data centers or antennas, or what they call active equipment, if you have more than just the masts, you have more information and more maintenance,” said Seixas. “It seems somewhat clear to me that there is an opportunity for more margin and more income.”

(Updates with share price in fifth paragraph.)

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