Abertis Looks to IPO for Euro Expansion

Spanish towers company Abertis has unveiled plans for an initial public offering aimed at spurring growth in what it considers to be "favorable" European conditions for its business model.

The company intends to list a 55% stake in its Cellnex Telecom business, which rents capacity on its network of mobile phone towers to operators in Europe.

Abertis has not indicated when the listing will take place or how much shares will cost, but the sale could raise between €1.4 billion (US$1.5 billion) and €1.7 billion ($1.9 billion), according to Bloomberg, while a separate report from the Financial Times (subscription required) estimates Cellnex could be worth as much as €4 billion ($4.3 billion).

The Abertis move points to a growing appetite in Europe for a model that has already taken off in other parts of the world, with operators selling towers to infrastructure specialists and then purchasing capacity from them.

Last month, Abertis acquired a total of 7,377 towers from Italy's Wind Telecomunicazioni SpA in a €693 million ($752 million) deal and it was recently reported to be in discussions with Telecom Italia about another towers transaction. (See Eurobites: Orange Hints at Italian Tie-Up.)

Its overall portfolio now comprises 15,170 sites, with 7,472 in Spain and 7,698 in Italy.

According to a statement it published about its forthcoming IPO, Abertis made €436 million ($473 million) in revenues and €178 million ($193 million) in EBITDA in 2014, with 24% of revenues coming from telecom site rental activity and around 57% from its broadcasting infrastructure business.

The remaining sales were generated from networking services, including the provision of connectivity to operators as well as general operations and maintenance services.

"Cellnex Telecom is perfectly suited to live as an independent listed company and the IPO will help accelerate the company's continued growth," said Francisco Reynés, the CEO of Abertis, in the company's statement.

"As the recent agreement with Wind in Italy has demonstrated, the market dynamics for an independent infrastructure operator in the European telecoms sector are very favorable and Cellnex Telecom is well placed to capitalize on them," he added.

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Abertis said that in addition to the 55% stake it is listing it would make available an over-allotment option of up to 10% of the size of the base offering. The offering is to be made available to institutional investors inside and outside of Spain, with further details to be provided in due course.

Selling towers to Cellnex and then leasing capacity from it could hold particular appeal for operators looking to quickly pay off debts and raise funding for spectrum purchases and other investment activities.

With 700MHz frequency auctions approaching in Germany and France, where competition in the mobile sector remains fierce, today's news could prompt speculation about the extension of Abertis' activities into new geographical markets. (See 700MHz: Coming soon to Germany.)

In the US, Crown Castle International Corp. (NYSE: CCI) has recently flourished by pursuing an identical approach, reporting a 22% increase in site rental revenues and a 19% rise in adjusted EBITDA last year. (See Crown Castle Weighs Sale of Australian Unit.)

In September 2012, Crown Castle agreed to pay $2.4 billion to lease 7,200 towers from T-Mobile US Inc. for 28 years, and a year later it negotiated a $4.83 million deal with AT&T Inc. (NYSE: T) for the purchase of 600 towers and lease of another 9,100. (See T-Mobile USA in $2.4B Towers Deal and AT&T Closes Crown Castle Deal.)

Other players offering similar services include American Tower Corp. (NYSE: AMT) and IHS, which claims to operate more than 22,000 towers across Africa.

— Iain Morris, , News Editor, Light Reading