When simplicity is synonymous with efficiency

Cellnex announces a strategy that reduces complexity and prioritizes growth and shareholder value

In his first Capital Markets Day since taking on the role of CEO of Cellnex, Marco Patuano announced the company’s commitment to remunerate shareholders with at least EUR 3 billion up to 2030, with firepower that could raise the figure up to 10 billion – including these 3 billion– earmarked for new industrial investment projects or shareholder remuneration via dividends or own stock purchases.

Using a very direct message that reveals his experience and knowledge of investment banking, the Italian manager explained his recipe for capitalizing on the value of a project to which he aims to apply a simpler approach in order to create value and capture business opportunities in the wake of the intense investment drive of recent years.

“This is not a revolution of the project, but rather an evolution towards a more industrial chapter”, explained the executive of one of Europe’s most M&A–intensive companies, with almost 40 billion invested in acquisitions since its IPO in 2015. “We are not an M&A company, we are an industrial business”, he added.

Under the basic premise of “predictable revenue and growth and high, resilient margins”, the summary of this “next chapter” appeared to reach the markets loud and clear. Stock rallied by three percent as analysts applauded tighter-than-expected leverage targets that will allow for faster and larger-than-anticipated shareholder returns.

With a new approach focused on efficiency, portfolio optimisation and capturing opportunities with demanding investment criteria, Patuano is convinced that the strategy “will allow us to balance investments and return significantly more cash to shareholders from 2026 onwards, while strengthening our position as Europe’s leading telecoms TowerCo.”

“I love simplicity. Life is complicated enough already,” said Patuano with a smile before an audience of analysts in London who heard the word several times during the presentation.

This simplicity, synonymous with efficiency, is implicit in the strategic review that includes divestments of non-essential assets with little growth potential, such as that announced on investor day: the sale of the business in Ireland for EUR 971 million. But it also involves reducing operational complexity and increasing margins while strengthening the balance sheet: “We can do much better”, said Patuano with conviction.

The reduction of leverage after the multimillion-euro investments of recent years is a key objective, which is already achieved, since on the same day of the presentation Patuano revealed that S&P had assigned the company its investment grade credit rating, a commitment initially expected for the end of the current financial year.

During his presentation, the CEO announced that the discipline they intend to apply to capital allocation will place the leverage target at a net debt equivalent to between five and six times EBITDA (compared to almost seven times at the end of 2023).

Patuano explained how this reduction will provide the company with further resources to allocate either to additional shareholder remuneration or to industrial investments with return on investment criteria based on the profile of each project, providing flexibility based on business scenarios and the macroeconomic environment.

The company estimates total cash volume generated between 2026 and 2030 at EUR 10 billion, aiming to balance the allocation via a combination of profit distribution via dividends (a minimum of EUR 3 billion between 2026 and 2030), and/or share buybacks, extraordinary dividends or investments in industrial growth opportunities (up to EUR 7 billion).

“The time has come to harvest, to obtain results,” said the executive.

Specifically, as of 2026, shareholders will receive a minimum dividend payment of EUR 500 million per year, with a minimum annual growth rate of 7.5% up to 2030, which could be higher depending on debt and credit risk developments.

The focus will be on maximizing the value of its assets by placing additional equipment in its infrastructures, increasing diversification by deploying new Build-to-Suit infrastructure, and performing selective investments in complementary activities, such as DAS, Small Cells, RAN or other services such as wholesale fibre.

In this scenario, he announced an ambitious objective to improve operational efficiency with a forecast 500 basis points increase in EBITDA margin to 64 percent in 2027. To support this strategy, the company also aims to optimise leasing costs, achieve operational and management improvements, and effect a more efficient digital transformation. During the presentation Patuano announced the creation of a specialised vehicle in four of the twelve countries in which Cellnex operates for the acquisition of land, an innovative initiative to optimise leasing costs and strengthen the company’s competitive position that could include the entry of a financial partner.

The group has projected constant growth in financial objectives up to 2027. Projections indicate steady growth, with projected revenues of between EUR 4.5 and EUR 4.7 billion in 2027, driven by a strong order book and the expectation of increased equipment placement.

Adjusted EBITDA is expected to stand between EUR 3.8 and EUR 4 billion, reflecting a significant improvement driven by reduced operational complexity. Forecast leveraged recurring free cash flow of between EUR 2.1 and 2.3 demonstrates the financial health of the company which, for FY 2024, anticipates revenues of EUR 3,850-3,950 million, with an adjusted EBITDA of up to EUR 3,250 million and a free cash flow of between EUR 250 and 350 million.

Carlos Ruano

Journalist and Founder of Newsbub