CLNXF - Cellnex Telecom: Trading At An Underlying 9% Free Cash Flow Yield
2024-06-01 10:40:00 ET
Summary
- Cellnex Telecom plans to focus on debt reduction and paying dividends, shifting its strategy from building additional towers.
- The company reported a net loss of €316 million, but its underlying sustaining free cash flow was approximately €1.26 billion.
- Cellnex aims to reduce its debt ratio to 5-6 times EBITDA within the next three years and plans to spend €3 billion on dividends and €7 billion on buybacks and potential M&A opportunities.
Introduction
Just over a year ago, I wrote an article on Cellnex Telecom ( OTCPK:CLNXF ) as the European counterpart of American Tower ( AMT ) and Crown Castle ( CCI ) was (and still is) tra ding at substantially lower multiples . As Cellnex is not structured as a REIT but as a normal corporation, its handicap is that it has to pay corporate taxes while the bottom line result is obviously heavily impacted by the depreciation and amortization expenses, which are a multiple of the sustaining capex to keep cell phone towers operating. I argued this was an opportunity to have a closer look at Cellnex as its debt load – which was one of the main arguments against an investment – is manageable and in line with the debt ratios of its North American peers. Fortunately Cellnex’ management also realized it had to change the perception of the company by focusing on free cash flow. Instead of reinvesting the free cash flow into building additional towers, Cellnex has now confirmed on a recent capital markets day it will focus on debt reduction and it will start to pay a dividend....
Cellnex Telecom: Trading At An Underlying 9% Free Cash Flow Yield