Cellnex Telecom S.a. · BME:CLNX
Cellnex Telecom — Investor Day (November 2017)
47 slides from Cellnex Telecom's investor day presentation, Nov 14, 2017
Slide 1: Capital Markets Day 2017
Capital Markets Day 2017 14 November 2017 Barcelona, Spain
Slide 2: Disclaimer
Disclaimer The information and forward-looking statements contained in this presentation have not been verified by an independent entity and the accuracy, completeness or correctness thereof should not be relied upon. In this regard, the persons to whom this presentation is delivered are invited to
Slide 3: Agenda
Agenda 09:30 Registration 10:00 Welcome and Introduction 10:15 Cellnex: All the Way 10:45 Q3 2017 Results & Full Year 2017 Financial Outlook 11:15 Coffee Break 11:30 Cellnex’s Positioning in a 5G World 12:00 IFRS 16 and its Implications 12:30 Next Steps and Closing Remarks 13:30 Lunch 14:30 Site Vis
Slide 4: Cellnex: All the Way
Cellnex: All the Way What We Said and Where We Are Location: Spain Urban site 3 customers Cellnex – Capital Markets Day 14 November 2017 4
Slide 5: Key Positioning Highlights
Cellnex: All the Way Key Positioning Highlights Based on a solid execution and a devoted management team, Cellnex has successfully delivered on the key targets set at its IPO 1 2 Favorable Underlying Markets Attractive Business Model IPO estimates confirmed Organic growth above market potential (PoP
Slide 6: Favorable Underlying Markets
Cellnex: All the Way 1 Favorable Underlying Markets Market estimates at IPO confirmed Mobile data traffic in Europe (1) growing at 42% CAGR 50 36 +42% 26 Exabytes (2)/ year EXPONENTIAL 18 CAGR GROWTH TO COME 13 (5G) 9 7 5 3 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2021e Cellnex …Cellnex IPO today
Slide 7: Attractive Business Model
Cellnex: All the Way 2 Attractive Business Model Organic growth above market expectations, coupled with a very high cash flow conversion ratio… PoPs 14-17 CAGR Cash flow conversion (3) RLFCF per share (€) 4.3% (2) 85% 83% 87% ~80% IPO IPO Over- 0.65 performance 2.2% (1) Market potential Cellnex Actu
Slide 8: Growing and Predictable Cash Flow Generation
Cellnex: All the Way 3 Growing and Predictable Cash Flow Generation Cellnex has beaten market expectations since the very beginning (+5%), and this over-performance is expected to widen going forward (+27%) (1) Adjusted EBITDA (1) Backlog (€Bn) (2) Figures in €Mn c.15 (3) 450 Actuals Estimates Curre
Slide 9: Leading European Telecom Infrastructure Operator
Cellnex: All the Way 4 Leading European Telecom Infrastructure Operator Cellnex is the key player in the European tower landscape Diversifying business exposure: from Spanish broadcaster to European TIS player Improved Footprint in Europe Improved Business Risk Profile Cellnex in 2014 x Country Rati
Slide 10: 10 debt-funded deals since IPO
Cellnex: All the Way 4 Leading European Telecom Infrastructure Operator 10 debt-funded deals since IPO, committing a total EV of c.€3Bn, boosting value creation (RLFCF per share +c.20% CAGR) whilst keeping structural flexibility for growth financing EV per year (1) Figures in €Mn 1,000 Total M&A EV:
Slide 11: Value Creation
Cellnex: All the Way Value Creation Attractive fundamentals and quality of execution recognized by the market, but significant optionality not priced in yet Share price IRR 17.2% (1) (relative) 160 140 120 +57% 100 80 Cellnex Ibex 35 60 may.-15 May 2015 sep.-15 Sep 2015 ene.-16 Jan 2016 may.-16 May
Slide 12: Q3 2017 Results & Full Year 2017 Financial Outlook
Q3 2017 Results & Full Year 2017 Financial Outlook Location: France Rural site 3 customers Cellnex – Capital Markets Day 14 November 2017 12
Slide 13: The period in a Nutshell
The period in a Nutshell Solid performance in line with market consensus Acceleration of growth strategy through value accretive agreements with key partners Consistent delivery on organic Signing a new framework Strengthening position in the growth agreement with a new Dutch market and 5G +3% new P
Slide 14: Key Highlights
Key Highlights Continued strong growth in Adjusted EBITDA and RLFCF per share Adjusted EBITDA (€Mn) 259 208 176 Adjusted EBITDA CAGR 2015-2017 of c.20% 9M 2015 9M 2016 9M 2017 RLFCF per share (€) 0.90 0.86 0.79 0.63 RLFCF per share CAGR 2015-2017 of c.20% 9M 2015 9M 2016 9M 2017 Cellnex – Capital Ma
Slide 15: Key Highlights: Strong performance of operational KPIs
Key Highlights Strong performance of operational KPIs PoPs – Total PoPs – Organic Growth 28,922 23,068 22,089 22,089 9M 2016 9M 2017 9M 2016 9M 2017 Contribution from both organic growth and New organic PoPs mainly due to network change of perimeter densification Customer Ratio DAS Nodes (1) 1,233 1
Slide 16: Q3 2017 Business Performance: Key Figures
Q3 2017 Business Performance Key Figures 31% PoPs growth Continued commercial drive to secure future organic growth PoPs 28,922 24,698 Organic growth targets on track: (i) new PoPs in line with guidance 22,089 (+4% vs. 9M 2016) (ii) 45% of decommissioning target (2) met and (iii) 979 Organic Growth
Slide 17: Adjusted EBITDA
Q3 2017 Business Performance Adjusted EBITDA Adjusted EBITDA growth of +25%, of which +8% organic growth +34 259 +8% +11% +8 +9 208 Sep 2016 Organic growth + effiencienes Recurring tv channels M&A Dic 2019 Jan-Sep Organic Recurring new Change of Jan-Sep 2016 Growth & TV channels and other Perimeter
Slide 18: Financial Structure
Q3 2017 Business Performance Financial Structure Ample liquidity - cash at hand and available debt amount to c.€1.6Bn First significant refinancing in 2022 750 Average Maturity c.6.1 years Average Cost c.2.4% (drawn debt) 135 (3) c.2% (both drawn and undrawn debt) (1) Gross Debt: c.€2.5Bn (Bonds and
Slide 19: Recurring Levered Free Cash Flow (RLFCF)
Q3 2017 Business Performance Recurring Levered Free Cash Flow (RLFCF) Strong cash conversion of Adjusted EBITDA into RLFCF of 80% Sep Sep Figures in €Mn 2016 2017 Telecom Infrastructure Services 281 340 Broadcast Infrastructure 174 179 Other Network Services 65 59 • Telecom Infrastructure Services u
Slide 20: Balance Sheet and Consolidated Income Statement
Q3 2017 Business Performance Balance Sheet and Consolidated Income Statement Balance Sheet (€Mn) Dec Sep Net debt/Adjusted EBITDA(1) reaches 5.4x 2016 2017 Non Current Assets Fixed Assets 2,545 2,084 3,376 2,801 • Purchase price allocation processes lead to fixed assets allocation, with only Goodwil
Slide 21: Financial Outlook Full Year 2017
Financial Outlook Full Year 2017 Management confirms Cellnex will close financial year 2017 at the upper end of its Adjusted EBITDA guidance range Adjusted EBITDA +44 (1) +21% 352 +6 +12 290 2017 Organic growth and efficiencies Recurrent new tv channels Change of perimeter Dic 2019 Jan-Dec Organic
Slide 22: Financial Outlook Full Year 2017: … and beyond
Financial Outlook Full Year 2017 … and beyond Several tailwinds not factored in … … and adapting to technical requirements of one specific TV client Best placed to seize the 5G A unique competitive opportunity advantage based on MSAs creating new partnerships • New distribution system implemented to
Slide 23: Frequently Asked Questions
Frequently Asked Questions Location: France Rural site 3 customers Cellnex – Capital Markets Day 14 November 2017 23
Slide 24: Taxes – Effective Tax Rate 2016
Frequently Asked Questions Taxes – Effective Tax Rate 2016 Cellnex’s effective tax rate in 2016 was below the hypothetical tax rate as a result of deductions from NID, R&D and know how incentives -7 -3 11 Hypothetical Gross tax Payable Temporary differences Non tax deductible NID R&D Know how NOLs E
Slide 25: Taxes – Effective Tax Trends
Frequently Asked Questions Taxes – Effective Tax Trends Cellnex’s effective tax rate is sustainable in the medium term despite the changing contribution of its components over time Expected trends Hypothetical Gross tax Payable Temporary differences Non tax deductible NID R&D Know how NOLs Effective
Slide 26: Efficiency Plan 2016-2019
Frequently Asked Questions Efficiency Plan 2016 -2019 Efficiency plan translating into flat Opex performance (on a like-for-like basis)… Expansion Capex 2016-2017 c.7% of total revenues Other measures on track Operating Expenses (1) c.2/3 allocated to the optimization Figures in €Mn of ground le
Slide 27: Cellnex France: Gradual Contribution of Sites and Adjusted EBITDA
Frequently Asked Questions Cellnex France: Gradual Contribution of Sites and Adjusted EBITDA Cellnex to become the #2 independent tower operator in France with high organic growth potential Pro Forma Run Adjusted EBITDA Sites owned End of Period Rate (Cumulative basis) c.€80Mn Figures in €Mn 4,500 8
Slide 28: Update on 4th Italian MNO
Frequently Asked Questions Update on 4th Italian MNO Context: 4th Italian MNO is supposed to launch commercial Services from Wind3 as a result of services within the coming six months, supported by Wind3 remedy package Rollout: agreements with European Commission and economic 3G & 4G temporary MOCN
Slide 29: Cellnex's Positioning in a 5G World
Cellnex’s Positioning in a 5G World Location: France Rural site 3 customers Cellnex – Capital Markets Day 14 November 2017 29
Slide 30: Scalability to address diverse services and devices
Cellnex’s Positioning in a 5G World Scalability to address diverse services and devices Massive connected things deployments Source: Qualcomm 2016 New industry verticals and use cases Growth of new cloud and video demanding high performance services and higher number of devices Cellnex – Capital Mar
Slide 31: What does 5G mean to Cellnex?
Cellnex’s Positioning in a 5G World What does 5G mean to Cellnex? Operators have invested more than €100Bn in network deployments over the last 5 years … … download speed x26,000 Cellnex – Capital Markets Day 14 November 2017 31
Slide 32: Denser networks through small cells
Cellnex’s Positioning in a 5G World What does 5G mean to Cellnex? Denser networks can be achieved through small cells, which are used to offload data in congested areas Macro overlay network Seamless handover Offloading network with small cells While micro cells will provide higher traffic capabilit
Slide 33: New coverage systems: macro cells, small cells and DAS
Cellnex’s Positioning in a 5G World What does 5G mean to Cellnex? Cellnex is deploying new coverage systems, combining different technologies such as macro cells, small cells and DAS DAS (indoor & outdoor) (hospitals, public buildings, downtown…) 3G/4G/5G, 900MHz-2,600Hz range <30m Small Cells range
Slide 34: 5G initiatives being developed
Cellnex’s Positioning in a 5G World 5G initiatives being developed iCity ESKALA SARWS SEAT Grow Densification Use Cases Smarter V2X Philips Lighting LEAN ARCH Street Parc High DAS JC Furnit. Decaux 5G 5G Motor ways Wanda Agrmt City City Orange Small cells Multi GIX Op BCN Smallc Front & 5G City Alti
Slide 35: 5G is a unique opportunity for Cellnex
Cellnex’s Positioning in a 5G World What does 5G mean to Cellnex? 5G is a unique opportunity for Cellnex in order to improve our proposition in the value chain 1 2 3 4 Traditional TowerCo: Passive TowerCo + commercial and NetCo: Active Network enabler infrastructure industrial excellence infrastruct
Slide 36: IFRS 16: Cellnex: Lease or Service?
IFRS 16 Cellnex: Lease or Service? Cellnex – Capital Markets Day 14 November 2017 36
Slide 37: IFRS 16: What is it?
IFRS 16 What is it? IFRS 16 is a new accounting standard (1) that defines the differences between a lease and a service agreement and requires the lessee to recognize an asset and a liability for ALL leases Lease Contract (according to IFRS 16) – MLA Contract that conveys the right to the MNO to con
Slide 38: Implications for Our Clients: The MSA
IFRS 16 1 Implications for Our Clients: The MSA Cellnex’s MSA does not fall under IFRS 16 due to the following industrial reasons: 1 2 The Network is considered our ‘unit of account’ – Our Master Service agreement consists of the not individual sites reservation of a technical footprint 3 4 Cellnex
Slide 39: MSA has a credit-positive impact for MNOs
IFRS 16 1 Implications for Our Clients: The MSA Cellnex’s MSA has a credit-positive impact for MNOs in comparison to an MLA MLA (1) (lease) MSA (2) (service) IFRS 16 Non-IFRS 16 P&L Illustrative example: Revenues €100Mn €100Mn Opex (€0Mn) (€10Mn) • Assume an MNO with EBITDA €100Mn €90Mn revenues of
Slide 40: Implications for Cellnex
IFRS 16 2 Implications for Cellnex Cellnex has lease contracts with landlords and the payments will be capitalized as liabilities Pre IFRS 16 (1) Post IFRS 16 Illustrative example: P&L Revenues €707Mn €707Mn Opex (€417Mn) (€257Mn) (2) EBITDA €290Mn €450Mn Cash EBITDA €290Mn €450Mn Payment of princip
Slide 41: Next Steps
Next Steps Closing Remarks and Q&A Location: Spain Urban site 3 customers Cellnex – Capital Markets Day 14 November 2017 41
Slide 42: Long-Term Perspective
Next Steps Long-Term Perspective Cellnex is currently facing its 2nd major transformation since its IPO: Cellnex 2.0 2012-2015 2015-2020 2020-2025 • Consolidating Europe • MSA-based approach • Listed company • Becoming the partner of trust • Specialist in passive for MNOs infrastructure • Expanding
Slide 43: Different countries, different priorities
Next Steps Long-Term Perspective Different countries, different priorities Setting the foundations for further expansion in Europe Cellnex today Tier 1 target Tier 2 target Tier 3 target Cellnex – Capital Markets Day 14 November 2017 43
Slide 44: A truly pan European leader
Next Steps Long-Term Perspective A truly pan European leader with vast majority of business generated outside of Spain and from TIS activities 2014 - IPO 2017 (1) 2020 (2) >4/5 EBITDA by geography 55% 5% 95% <1/5 45% Marginal contribution from Spain and non- TIS activities >4/5 Revenues by service 6
Slide 45: Future performance to beat market expectations
Next Steps Long-Term Perspective Cellnex’s future performance will beat current market expectations in terms of projections and backlog Figures in €Mn Adjusted EBITDA (1) Backlog (€Bn) (2) Actuals Estimates 500 Current market consensus c.15 (3) c.12 (2) 350 c.8 Sell side estimates at IPO c.2 200 201
Slide 46: Definitions
Definitions Term Definition Adjusted EBITDA Profit from operations before D&A and after adding back certain non-recurring and non-cash items (such as advances to customers and prepaid expenses) Adjusted EBITDA margin Excludes elements pass-through to customers (namely electricity and in some cases g
Slide 47: Definitions
Definitions Term Definition M&A investment Investments in shareholdings of companies as well as significant investments in acquiring portfolios of sites (asset purchases) MLA Master Lease Agreement MNO Mobile Network Operator MSA Master Service Agreement MUX Multiplex, a system of transmitting sever