Cellnex acquires 2,339 towers and rooftops from Sunrise: exclusive CCO interview

Europe’s leading towerco adds a sixth country to their footprint

Read this article to learn:

  • The rationale behind Cellnex entering the Swiss market
  • The scale, tenancy ratio and geographical distribution of the acquired portfolio
  • Why Cellnex took a consortium approach to this deal
  • The impact of the deal on Cellnex’ EBITDA and contracted sales
  • Why Cellnex favors a Master Service Agreement contract structure as opposed to a Master Lease Agreement

Last week Cellnex announced they had reached agreement for the acquisition of 100% of Swiss Towers AG and their 2,339 towers and rooftops from Sunrise, the #2 MNO in Switzerland, for €430mn. When closed, the transaction will take Cellnex’s portfolio beyond 23,000 sites, making the company the tenth largest towerco in the world by site count. TowerXchange spoke to Cellnex CCO Alex Mestre to learn more.

TowerXchange: Congratulations on your announced acquisition of 2,339 sites from Swiss Towers AG (Sunrise) – what attracted Cellnex to bid for these particular assets and to enter the Swiss market?

 Alex Mestre, Chief Commercial Officer, Cellnex:

This is a deal that enables us to further consolidate Cellnex’ European platform. Switzerland is a country marked by stable and secure economic and political environment, while also offering Cellnex clear synergies through its geographical location next to France and Italy, where the Company is also present. Undertaking this acquisition with reputable partners such as Swiss Life Asset Managers and Deutsche Telekom Capital provides not only financial support, but essential knowledge and access to this market as well as to other Central European countries.

Moreover the dynamics of the market driven, as in many other European countries, by significant mobile data traffic data growth is a trigger and a positive stimulus for any telecom infrastructure operator.

TowerXchange:  What can you tell us about the portfolio you have acquired and structure of the Swiss tower market? And what is the extent of existing co-location?

Alex Mestre, Chief Commercial Officer, Cellnex:

Switzerland currently has a total stock of approximately 11,300 sites providing mobile voice, data service and coverage.

Swiss Towers AG operates 2,339 sites throughout Switzerland with a greater presence in the cantons of the north and west of the country. It means that in just one move Cellnex already achieves critical mass with close 20% of the country’s towers, operating the second network in terms of size, should we include the 200 DAS nodes committed with Sunrise and to be deployed.

32% of these sites are located in urban areas and 64% on rooftops.

The customer ratio is 1.1x .

TowerXchange: Xavier Niel’s NJJ Capital recently acquired number three MNO Salt – Niel’s opcos have a track record of aggressive rollouts with an infrastructure-light network plan – how appealing does that make Salt as a prospective tenant, and to what extent does market leader Swisscom have need for co-location given the relative size of their network and recent network capex?

 Alex Mestre, Chief Commercial Officer, Cellnex:

The very reason for the existance of an independent tower and telecom infrastructure operator is to drive and improve sharing. This is a process that does not take place overnight.  Every MNO is, thus, more than welcome. But beyond increasing customer ratios in the existing asset base, the prospects lie as well in the densification that LTE/5G deployment will require.

As in other European markets, the Swiss mobile telecommunications market is experiencing significant growth in mobile data, for which year-on-year growth is expected to exceed 45% over the next five years.  This means further deployment both in urban as non urban areas and it’s reasonable to think that sharing and co-investment schemes will gain momentum. The fact that Cellnex Switzerland will already own a strong position in the Swiss market, with a network covering the whole country,  is a compelling argument in order to capitalise on the future deployment of the next generation of infrastrustures. The agreement with Sunrise to deploy 200 DAS nodes is an example.

TowerXchange: While Cellnex has acquired a majority 54% stake in Swiss Towers, for the first time you’ve teamed up with a consortium of investors (Swiss Life Asset Managers with 28% and Deutsche Telekom Capital partners with 18%) – was this consortium-approach adopted exclusively because of your partners’ knowledge and access to the Swiss market, or would Cellnex consider a similar consortium-approach for future acquisitions?

Alex Mestre, Chief Commercial Officer, Cellnex:

We have been clear in the past stating that one alternative to continue to drive our growth is this kind of consortium-approach. This is a scheme that we already adopted last year when we partnered with F2i in Italy when a potential INWIT sale was considered.

Thus, this is not new to us and it becomes clear that it may well happen again in future deals.

TowerXchange: What impact do you anticipate this acquisition having on Cellnex EBITDA and forecast future revenue growth?

Alex Mestre, Chief Commercial Officer, Cellnex:

Once the transaction is completed, and assuming the contribution of newly deployed sites through the build to suit program and 200 DAS nodes, the run-rate EBITDA contributed by Swiss Tower AG sites will be in the region of €37mn.

Cellnex group’s backlog (i.e. contracted sales) will approach to €15bn from the current figure of €12bn.

the industry – and Cellnex is playing a leading role – is moving towards a more holistic vision in which independent infrastructure operators take care of other variables based on engineering services, network planning and execution, active equipment management, et cetera

TowerXchange: Cellnex has again used your Master Service Agreement (MSA) contract structure, as opposed to a Master Lease Agreement (MLA) – how does this approach help your MNO counterparts avoid capitalising lease fees post IFRS 16 Lease changes? And do the longevity and cancellation / renewal terms of MSAs differ significantly from MLAs?

Alex Mestre, Chief Commercial Officer, Cellnex:

MSA schemes clearly underline the industrial and service approach that qualifies the value creation proposal for our customers. This is an evolving business model. From a pure passive infrastructure management concept, the industry – and Cellnex is playing a leading role – is moving towards a more holistic vision in which independent infrastructure operators take care of other variables based on engineering services, network planning and execution, active equipment management, et cetera.

Clearly, upcoming sharing schemes that will increase its visibility alongside the deployment of 5G will even reinforce MSA structures as a right and suitable alternative for our MNOs clients.

Longevity or cancellation /renewal terms do not differ significantly from the known MLAs schemes. 


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