Cellnex Reports 6% Growth in 2022

Narrow-moat Cellnex’s CLNX fourth-quarter results were more or less a reiteration of what we already heard last quarter. Management remains committed to getting an investment-grade rating from Standard & Poor’s while executing its organic business plan. Cellnex could also sell minority stakes in some of its subsidiaries to unlock hidden value and accelerate the investment-grade rating process. We believe this measure will have a neutral impact on shareholders, as it would raise cash and optically strengthen Cellnex’s balance sheet, but would also entitle any minority investors to dividend payments. We maintain our EUR 52 fair value estimate.

For the full year, points of presence in Cellnex’s towers grew by 6.0%, with 2.9% coming from co-location and 3.1% from new build-to-suit towers. In the fourth quarter, Cellnex’s tenancy ratio was reduced to 1.35 times, compared with 1.36 in third-quarter 2022, with the reduction explained by finalization of the CK Hutchison U.K. acquisition, which was dilutive to this metric. On a like-for-like basis, we estimate Cellnex’s tenancy ratio would have increased to 1.4 times. Cellnex’s strongest performers in 2022 were Spain, Italy, and Portugal, more mature markets where mobile competition is intense, favoring the deployment of mobile networks. Its EBITDA-after-leases margin expanded by 30 basis points year over year to 52.6%.