Cellnex Earnings: In Advanced Talks to Sell Austrian Business and Use Proceeds to Repurchase Shares

Cellnex’s management remains active on its divestment strategy, announcing that it is in advanced negotiations to sell its Austrian business. The sale price will likely be lower than the EUR 1.1 billion Cellnex paid in 2021 for this asset, given Cellnex just reported a EUR 311 million goodwill and intangible asset impairment on it. Proceeds will be used for share repurchases, which we believe investors have welcomed, sending the shares up 4%. Buybacks make sense to us at this point, since we think the shares are undervalued. Just like the recent sale of the Ireland business, we believe the sale of the Austria asset is proof that Cellnex’s prior management went too far with acquisitions, sometimes acquiring subpar assets. The organic performance of the Austrian business has been very poor during the past four years, with tenancy ratios flat at 1.15 times, a number we don’t consider enough to generate excess returns on invested capital. We are maintaining our EUR 52 fair value estimate and narrow moat rating.