Cellnex Telecom S.a. · BME:CLNX
Cellnex Telecom — Investor Day (March 2024)
80 slides from Cellnex Telecom's investor day presentation, Mar 5, 2024
Slide 1: Capital Markets Day: Next Chapter, a strengthened commitment
Capital Markets Day Next Chapter, March 5th, 2024 a strengthened commitment
Slide 2: Welcome to our Capital Markets Day
Welcome to our Capital Markets Day, we're looking forward to sharing our view of Cellnex’s future Anne Marco Vincent Simone Raimon Juan Bouverot Patuano Cuvillier Battiferri Trias Gaitán Chairperson CEO CSO COO CFO Head of Investor Relations Chief Strategy Officer = CSO, Chief Operations Officer = C
Slide 3: Agenda for today
Agenda for today NEW REPORTING, CAPITAL 13:00 WELCOME 14:25 STRUCTURE AND ALLOCATION Raimon Trias - CFO CELLNEX'S NEXT CHAPTER GUIDANCE 13:05 14:55 Anne Bouverot - Chairperson Juan Gaitán - Head of Investor Relations Marco Patuano - CEO STRATEGIC POSITIONING CLOSING REMARKS 13:25 15:10 Vincent Cuvil
Slide 4: Cellnex's Next Chapter
01 Cellnex's Next Chapter Anne Bouverot - Chairperson Marco Patuano - CEO
Slide 5: Europe's leading operator of wireless telecommunications infrastructure
Cellnex's next chapter As Europe’s leading Strengthened Board of Directors operator of wireless governance and oversight… telecommunications … and new leadership team focused on infrastructure, Cellnex operational performance is now fully focused on operational excellence Reinforced governance rules
Slide 6: One Cellnex
Cellnex's next chapter One Cellnex 2023 2015 15% Kick-off the TSR1 yr One-Cellnex (1) Team and Organization industrial model Appointed strong C-suite of COO, CSO, CFO, Becoming the largest Chief Regulatory, with relevant technical European TowerCo expertise and industrial profile Country CEOs receiv
Slide 7: To deliver value creation
Cellnex's next chapter To deliver value creation (3) Disciplined and rigorous approach to Capital Allocation 2024+ Articulate investments by (2) Shareholder Value Golden Rules Set long-term leverage target of – Return > WACC + Risk Next Chapter 5.0-6.0x Net Debt/Ebitda by 2025- premium (country, bus
Slide 8: A success story with highly predictable revenues and resilient margins
Cellnex's next chapter A success story with highly predictable revenues and resilient margins Predictable revenue and growth High and resilient margins Secured Strong Proven ability Diversified Protection Immune to Strong revenues and relationships to drive organic client from energy operating growt
Slide 9: We are shifting focus to cement our leadership in the EU TowerCo industry
Cellnex's next chapter We are shifting focus to cement our leadership in the EU TowerCo industry Driving industrial value, securing healthy growth and yield • Focus on organic growth, selective expansions, prudence with CapEx 2015-2022 Today EU Tower market infancy Established market Incipient data
Slide 10: We will execute our strategy with four pillars moving forward
Cellnex's next chapter We will execute our strategy with four pillars moving forward 11
Slide 11: This chapter will set us on a path towards success and greater shareholder value
Cellnex's next chapter This chapter will set us on a path towards success and greater shareholder value Upholding our …delivering on our … and increasing core values… commitments… shareholder value Neutral and independent Achieving investment grade Long-term capital structure guiding by S&P by end o
Slide 12: Strategic Positioning
02 Strategic Positioning Vincent Cuvillier - CSO
Slide 13: Strategic Positioning
Strategic Positioning Our growth story and business model strengths Opportunities and challenges ahead Strategic Positioning Our evolving strategy and the pillars to deliver on it Simple: reviewing our portfolio to reduce complexity Responsible: continue leading in ESG 14
Slide 14: Cellnex is the Pan-European TowerCo leader
Strategic Positioning Our growth story Cellnex is the Pan-European TowerCo leader At IPO… Today… 2 12 markets 3.0 2 16 anchors 1.6 4.1 2.0 12.9 15.9 14k 111k tower sites1 23.2 5.4 4.6 21k 155k PoPs2 6.5 7.4 8.8 7.7 21.9 Number of tower sites (k) # in 2015 # in 2023 Note: Considering perimeter as of
Slide 15: National champions in over 80% of our markets
Strategic Positioning Our growth story National champions in over 80% of our markets Cellnex Market share (in # of Towers) YE2023 1 2 3 #1 or 2 in Cellnex position 1st 2nd 1st 2nd 1st 1st 2nd 1st 3rd 2nd 2nd 3rd c.80% of our markets Note: Considering perimeter as of Dec 2023. 1. Market share in UK i
Slide 16: Presence in 4 business lines, Towers our core
Strategic Positioning Our growth story Presence in 4 business lines, Towers being our CORE with >80% of revenues Towers DAS, Small Cells Fiber, Connectivity Broadcast & RAN-as-a-Service & Housing Services Tower co-location DAS & Small Cells FTTT TV RAN-as-a-Service Fiber Transmission Radio Mission C
Slide 17: 12 markets, with top 5 representing >80% of revenues
Strategic Positioning Our growth story 12 markets, with top 5 representing >80% of revenues Top 5 markets Rest of Europe Towers DAS, Small Cells & RAN-as-a-Service Fiber, Connect. & Housing Services Broadcast 776 633 595 570 405 680 2023 Revenues1 (€Mn) (20%) (17%) (16%) (16%) (11%) (c.20%) c.80% No
Slide 18: Cellnex has built a resilient business with predictable revenues and growth
Strategic Positioning Business model strengths Cellnex has built a resilient business with predictable revenues and growth Strong Future-proof Secured revenue Diversified relationships with industry with strong base and growth client base our anchors growth drivers 19
Slide 19: Secured revenues with the largest backlog in the industry
Strategic Positioning Business model strengths Secured revenue base Secured revenues with the largest backlog in the industry Total long term backlog1 Expected revenues 2027E vs 2023 c.80% c.€110 + CPI of 2023-2027E growth is contracted Bn Existing long-term contracts with clients, including current
Slide 20: Proven ability to achieve organic growth
Strategic Positioning Business model strengths Secured revenue base Proven ability to achieve organic growth Customer Ratio increase through co-location Value accretive BTS commitments Cumulative growth in CR only considering organic co-locations1 (%) >80% in 2017-2023 timeframe Towers €4.5Bn BTS Ca
Slide 21: Diversified client base in developed markets
Strategic Positioning Business model strengths Diversified client base Diversified client base in developed markets Anchor tenants Share of revenues from Share of revenues from Markets Top 3 clients (%) developed markets (%) 191 16 71 c.75 16 12 482 100 12 253 46 c.65 5 10 100 100 3 1 73 100 2 2 100
Slide 22: Long-term anchor relationships: committed, expanded, and extended
Strategic Positioning Business model strengths Strong anchor relations Long-term anchor relationships: committed, expanded, and extended Success case2 Avg. contract length1 Proven client mutual trust Years 2016 2017 2018 2019 2020 2021 2022 2023 31 c.500 sites 2.2k BTS + Edge DCs JV for fiber BTS an
Slide 23: Growth in 5G coverage and data traffic demand will require scaling infrastructure
Strategic Positioning Business model strengths Future-proof industry Growth in 5G coverage and data traffic demand will require scaling infrastructure Room for growth from 5G coverage Data traffic will lead to long-term growth 5G coverage per country (2023, % population covered) Data traffic per use
Slide 24: Mobile Telco consolidation and inflation: 2 important trends
Strategic Positioning Changing context Mobile Telco consolidation We expect limited impact from consolidation and potential new business opportunities 2 important trends present opportunities and challenges Inflation Our margins benefit from moderate levels 25
Slide 25: MNO consolidations and network sharing present both opportunities and risks
Strategic Positioning Changing context MNO consolidation MNO consolidations and network sharing present both opportunities and risks Industry dynamics pressuring MNOs Implications for TowerCos Opportunities Margin pressure Consolidation & • Reducing ARPUs1 Network Sharing • Value co-creation with cl
Slide 26: Our contract protections limit the impact of potential mergers
Strategic Positioning Changing context MNO consolidation Our contract protections limit the impact of potential mergers to our business Existing protections On track • Contractually protected PoPs • "Take or Pay" and "all-or-nothing" clauses Advanced • Existing contracts preventing RAN sharing or ne
Slide 27: Our robust contract structure enables margin improvements from moderate inflation
Strategic Positioning Changing context Inflation Our robust contract structure enables margin improvements from moderate inflation Return to moderate inflation is expected… … allowing our EBITDAaL margin to increase Eurozone Harmonized Index of Consumer Prices Our contract structure is protected fro
Slide 28: Our strategy will focus on boosting industrial value, guided by four pillars
Strategic Positioning Evolving strategy Our strategy will focus on boosting industrial value, guided by four pillars Driving industrial value, securing healthy growth and yield Historically: Supporting Now: Sharing the benefits MNOs by enabling from optimization and large investments efficiency with
Slide 29: We are strategically reviewing our portfolio on a constant basis
Strategic Positioning Simple: portfolio review We are strategically reviewing our portfolio on a constant basis 30
Slide 30: We continue reviewing each market and business line with 3 objectives
Strategic Positioning Simple: portfolio review We continue reviewing each market and business line with 3 objectives… Consider targeted further growth Finding relevant partners where beneficial to grow more profitably and efficiently Assessment based on a set of criteria Strategic fit Enhance mana
Slide 31: …and have already started to build a simpler portfolio…
Strategic Positioning Simple: portfolio review …and have already started to build a simpler portfolio… Partnering in growing markets Disposing non-core, sub-scale Asset rotation business Nordics On track • Sold 49% stake in Nordics in • Signed sale of 100% in Signing by 1H24 September 2023 November
Slide 32: A clear portfolio strategy, focusing on our core and our anchor MNOs
Strategic Positioning Simple: portfolio review …with a clear portfolio strategy, focusing on our core and our anchor MNOs Share of revenues 2027E Will continue to be our core business, where we are leaders Towers c.80% Be selective in expansion opportunities DAS, Small Capture value-driven growth in
Slide 33: Sustainability is part of our DNA
Strategic Positioning Responsible: leading in ESG Sustainability is part of our DNA as a company, with a shared management of infrastructures Keep ESG as a vital part of our strategy, not a consequence of it 34
Slide 34: We will achieve our ESG 2025 targets, and continue leading the industry
Strategic Positioning Responsible: leading in ESG We will achieve our ESG 2025 targets, and continue leading the industry Strategic axes of ESG Plan Recognized industry leaders Dec. 2023 Show who we are, Be a facilitator Extend our commitment Included in DJSI Europe acting with integrity of social p
Slide 35: Strategic Positioning key takeaways
Strategic Positioning We have a diversified presence across 4 lines and 12 markets • c.80% of revenues from Towers 1 • c.80% of revenues from Top 5 countries • c.80% of our markets see us as #1 or #2 Our business is built on solid foundations: long 2 term secured revenues and resilience to key risks
Slide 36: Operations
03 Operations Simone Battiferri - COO
Slide 37: Operations: Delivering focused growth
Operations Delivering focused growth Organic growth in Towers and selective investments in attractive and complementary adjacent businesses Becoming operationally more efficient Operations Rationalizing assets, optimizing cash-cost base and improving the Group’s productivity and quality of service t
Slide 38: We will combine growth and efficiency adapting to market specificities
Operations Strategy across markets We will combine growth and efficiency adapting to market specificities and opportunities Growth Efficiency Macro Tower growth operations Deliver BTS programs Operations with space efficiently for macro tower growth, Relevant Lease cost optimization Cellnex BTS prog
Slide 39: Focused
Operations Focused Prioritize co-location growth Extract full value from BTS Complement BTS with a "Co-location to Suit" mentality where possible Invest selectively in opportunities beyond Towers 40
Slide 40: Drivers of growth across each business line
Operations Focused Drivers of growth across each business line Key figures Revenue Share of by 2027 CAGR revs. 2027E 23-27E Growth in co-tenancy ARPT1 +c.3% CAGR Towers Ongoing BTS and expansion programs, most of which will be 5-6% c.80% Towers +c.3% CAGR deployed by 2027 DAS, Small Leverage densifi
Slide 41: PoPs will grow by increasing co-tenancy and building new sites
Operations Focused Tower business PoPs will grow by increasing co-tenancy in existing sites and building new sites We will grow >30k PoPs1 Co-location PoPs c.50% Have co-tenants in existing sites Organic success cases (non exhaustive): • Leverage existing assets • Increase operating leverage • Minim
Slide 42: Introducing the Total PoPs metric
Operations Focused Tower business The evolving nature of our market requires a new lens to assess performance: introducing the Total PoPs metric The mix of PoP types in our towers has evolved Given the mix change, the previous PoP metric with increased weight in RAN Sharing would underestimate the t
Slide 43: We expect c.1.64x CR while growing tower base
Operations Focused Tower business Despite the dilutive effect of BTS, we expect c.1.64x CR while growing tower base Estimated CR evolution Average Revenue per Tower Base 100 This will make our CR reporting consistent with our peers c.3% CAGR c.1.64x1 1.54x c.1.47x 1.39x 2023 2024E 2025E 2026E 2027E
Slide 44: We are committed to improve co-tenancy to maximize asset value
Operations Focused Tower business We are committed to improve co-tenancy to maximize asset value We will further optimize new BTS commitments, balancing …to provide additional industrial and financial build-to-suit with co-location-to-suit where possible… value for Cellnex and our clients We have an
Slide 45: We will invest selectively in adjacent business lines
Operations Focused DSCR and FCHS For DAS, Small Cells & RAN-as-a-Service and Fiber, Connectivity & Housing Services, we will invest selectively Complementary to These business lines are expected to Tower business move from c.11% in 2023 to c.15% of our revenue in 2027E Growth potential Value accreti
Slide 46: Small but fast-growing DAS & Small Cells markets
Operations Focused DSCR Small but fast-growing DAS & Small Cells markets are a clear complement to our core tower portfolio Ambition Clear demand drivers Two business models Maintain European leadership • Increase of network data traffic 1 Infrastructure model • MNOs demand to improve coverage • 2+
Slide 47: Pioneering the industry through RAN-as-a-Service in Poland
Operations Focused RANaaS Pioneering the industry through RAN-as-a-Service in Poland 3 RANaaS business model 2 1 2 3 We are leaders in exploring an integrated passive + active model 1 Passive assets RAN MNO Model will serve as a test case for Ownership MNO a TowerCo-driven network & Operation ration
Slide 48: FTTT is imperative for 5G expansion
Operations Focused FCHS FTTT is imperative for 5G expansion, and we will selectively invest to add further value to our assets and strengthen our relationship with anchors We see Fiber to the Tower as a clear value … and we will be focused when choosing our target segment add to our tower assets… Ce
Slide 49: Efficient
Operations Efficient Optimize our operations Increase organizational productivity Capitalize on economies of scale Accelerate unlocked value 50
Slide 50: We are launching a comprehensive efficiency plan
Operations Efficient Lease Cost Optimization We are launching Tower Rationalization a comprehensive efficiency plan to improve EBITDAaL Operation and Maintenance and FCF Enhancement Digital Transformation and Productivity Improvement 51
Slide 51: We expect c.8% reduction in lease cost vs. inertial cost base
Operations Efficient Lease cost optimization We expect c.8% reduction in lease cost vs. inertial cost base Lease cost optimization c.8% savings vs. inertial cost base Lease cash-out bridge Accelerate lease cost optimization c.-8% Enhance our lease efficiency program to increase savings rate c.+19% L
Slide 52: Creating a LandCo to accelerate lease cost optimization
Operations Efficient Lease cost optimization Creating a LandCo to help accelerate value creation in lease cost optimization Lease cost optimization • Vehicle for land acquisition acceleration initially in Accelerate lease some countries cost optimization • Carve out of real estate assets: initial se
Slide 53: Segmenting our tower portfolio to increase revenue and margin
Operations Efficient Tower Rationalization Segmenting our tower portfolio allows us to identify opportunities to increase revenue and margin per tower, while optimizing CapEx Tower Rationalization Sites ABC analysis to proactively Site segmentation identify targets for efficiency improvement levers
Slide 54: Optimizing tower maintenance and operations
Operations Efficient Operation and Maintenance Optimization Optimizing tower maintenance and operations through high-impact initiatives Operation and Maintenance Enhancement c.10% savings vs. inertial cost base Maintenance OpEx + CapEx bridge Maintenance cost c.-10% reduction c.+23% Assess policies
Slide 55: Digital transformation fueling further efficiency
Operations Efficient Digital Transf. and Productivity Improvement Digital transformation fueling further efficiency through standardization, automation, and data-driven solutions with a "One Cellnex" mindset Digital Transformation and Productivity Improvement Accelerating simplification and automati
Slide 56: Operations key takeaways
Operations Continued focus on Towers, with average annual PoP growth 1 of c.5%, equally divided in BTS and co-locations Revenue per tower growing at c.3%, while Customer Ratio 2 expects to reach c.1.64x by 2030 (total PoPs) Selective investment in complementary growing adjacencies, 3 Operations whic
Slide 57: New Reporting, Capital Structure & Allocation
04 New Reporting, Capital Structure & Allocation Raimon Trias - CFO
Slide 58: A more transparent Cellnex with increasing shareholder value
New Reporting A more transparent Cellnex with increasing shareholder value Capital Structure and Allocation New Reporting Financial policy that prioritizes deleveraging, Improved disclosure of capital discipline and our financials shareholder remuneration 59
Slide 59: Our enhanced financial disclosure provides more granular detail
New Reporting Our enhanced financial disclosure provides more granular level of detail Previous reporting New reporting • 3 Business lines • 4 business lines – TIS – Towers Revenues – Broadcast – DAS, SCs and RANaaS – Other Network Services – Fiber, Connectivity and Housing Services • Pass-through i
Slide 60: New reporting provides more granularity across business lines and markets
New Reporting Revenue Bridge New reporting provides more granularity across business lines and markets Revenue (2023, €Mn) Other Network 4,053 4,053 Services 3% 6% 3,659 21% Broadcast 7% 4% 6% 17% 16% TIS1 91% 16% 83% 11% 19% FY 2023 FY 2023 Rest of Europe Pass-through2 DAS, Small Cells & RANaaS Tow
Slide 61: Breakdown of organic revenue composition
New Reporting Org. Rev. Composition Breakdown of organic revenue composition +15% Revenues excluding Pass-through €Mn 204 3,659 114 80 81 3,180 FY 2022 Escalators & CPI Co-location2 BTS Changes of FY 2023 Perimeter & Others 62
Slide 62: Removing the impact from Pass-through costs
New Reporting OpEx Removing the impact from Pass-through costs Previous reporting New reporting Jan-Dec Jan-Dec €Mn 2023 €Mn 2023 Staff costs -282 Staff costs -282 1 Net contribution of Pass- Repair and maintenance -111 Repair and maintenance -111 through (mostly utility Utilities -366 Services2 -25
Slide 63: Providing more granularity on CapEx allocation
New Reporting CapEx Providing more granularity on CapEx allocation Previous reporting New reporting 1 Investment related to tower business expansion that generates additional RLFCF, including among others, Jan-Dec Jan-Dec telecom site adaptation for €Mn 2023 €Mn 2023 new tenants. Certain tower upgra
Slide 64: A more transparent Cellnex with increasing shareholder value
Capital Structure & Allocation A more transparent Cellnex with increasing shareholder value Capital Structure and Allocation New Reporting Financial policy that prioritizes deleveraging, Improved disclosure of capital discipline and our financials shareholder remuneration 65
Slide 65: New Cellnex Financial Policy Priorities
Capital Structure & Allocation New Cellnex Financial Policy Priorities Maximizing shareholder returns at Investment Grade Unconditional New Long-term Disciplined Capital Commitment to IG Target Leverage Allocation ✔ ✔ ✔ Industrial Minimum Share Business Dividend Buybacks Opportunities 66
Slide 66: First priority is deleveraging to achieve IG by S&P in 2024
Capital Structure & Allocation Commitment to IG Cellnex first priority is to focus on deleveraging to achieve IG by S&P in 2024 Strong commitment to achieve Investment Grade IG Rating ✔ Since IPO Commitment to Investment Grade Commitment to be within this Considerations credit rating level on a sust
Slide 67: Significant cash generation to accelerate de-leverage
Capital Structure & Allocation Target leverage Significant cash generation driven by end of BTS programs and organic EBITDA growth to accelerate de-leverage Contracted BTS CapEx Organic deleveraging evolution (excludes asset rotation after 2023) (€Mn) Leverage Ratio + Cash generation Net Debt / EBIT
Slide 68: Well-designed debt maturities profile
Capital Structure & Allocation Maturities Well-designed debt maturities profile 4.000 150 Liquidity +€3Bn: including cash and 700 undrawn credit lines 3.000 Fixed rate debt 76% 850 2.000 500 Asset rotation proceeds to be used 280 155 423 315 for repayment of maturities 103 80 191 61 1.000 80 2024 50
Slide 69: Long-term target leverage of 5.0-6.0x Net Debt / EBITDA IFRS 16
Capital Structure & Allocation Target Leverage Long-term target leverage of 5.0-6.0x Net Debt1 / EBITDA IFRS 16, consistent with our IG commitment and achievable by 2025-2026 ✔ ✔ High visibility on Excellent Business future contracted Profile2 revenues Long-term Target Leverage 5.0-6.0x Net Debt / E
Slide 70: Significant cash generation potential boosted by re-leveraging capacity
Capital Structure & Allocation Cash Generation Significant cash generation potential boosted by re-leveraging capacity Organic growth, cash generation and potential re-leverage to boost distributions and implement opportunities Free Cash Flow Evolution (€Mn) and re-leverage Provides significant flex
Slide 71: New approach to shareholder remuneration
Capital Structure & Allocation Dividend Policy New approach to shareholder remuneration1 aims to provide a visible, recurring and growing remuneration to shareholders Minimum dividend evolution (€Mn) Target of €500Mn minimum dividend payable from 2026 €500Mn Minimum 7.5% annual growth from 2026
Slide 72: Clear and disciplined capital allocation framework
Capital Structure & Allocation Capital Allocation Clear and disciplined capital allocation framework to maximise value creation and shareholder return Cumulative cash until 20301 c.€3Bn >€10Bn Minimum dividend Triggered by value accretion AGM approval in Share buyback Tax efficient2 place for up to
Slide 73: New Reporting, Capital Structure & Allocation key takeaways
New Reporting, Capital Structure & Allocation 1 Improved financial disclosure Commitment to reach investment grade by 2 S&P in 2024 New Reporting, Capital Structure & 3 Target leverage of 5.0-6.0x Net Debt/Ebitda IFRS 16 Allocation €500Mn minimum dividend payable from 2026, Key takeaways 4 with 7.5%
Slide 74: Guidance
05 Guidance Juan Gaitán – Head of Investor Relations
Slide 75: Short term financial outlook
Guidance Short term financial outlook 2023 guidance achieved and ambitious targets set for 2024E and 2025E €Mn Actual 2023 Guidance 2024E1 Guidance 2025E1 Revenues 3,659 3,850 – 3,950 4,100 – 4,200 (ex pass-through) Adjusted 3,150 – 3,250 3,008 3,400 – 3,500 EBITDA RLFCF 1,545 1,650 – 1,750 2,000 –
Slide 76: Medium term financial outlook
Guidance Medium term financial outlook New guidance disclosed for 2027 €Mn Actual 2023 Guidance 2027E1 CAGR (23-27) Revenues (ex pass-through) 3,659 4,500 – 4,700 +6% Adjusted EBITDA 3,008 3,800 – 4,000 +7% EBITDAaL 2,157 2,850 – 3,050 +8% RLFCF 1,545 2,100 – 2,300 +9% FCF 150 1,100 – 1,300 c.8x gro
Slide 77: Closing Remarks
06 Closing Remarks Marco Patuano - CEO
Slide 78: We have the Team and the Governance to deliver the next chapter
Closing Remarks 1 We have the Team and the Governance to deliver the next chapter of success 2 We will deliver growth and operational excellence leveraging on a rigorous industrial approach, focused on 4 pillars: • Simple – playing in markets and businesses where we have scale and leadership • Focus
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