Cellnex deepens their commitment to small cell with the acquisition of CommsCon
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Cellnex deepens their commitment to small cell with the acquisition of CommsCon


12.4x EBITDA valuation sets a benchmark for the value of European small cell operations

Cellnex has announced the acquisition of CommsCon Italia s.r.l. for €18.65mn, representing a 12.4x multiple on a forecast EBITDA of €1.5bn through 2017. CommsCon operates 85 technical rooms hosting 720 base transceiver stations, in turn connected to a sense network of 12,200 small antennas deployed in DAS systems in landmark sites such as Milan’s San Siro stadium and Turin’s Juventus stadium; the Milan, Genoa and Brescia undergrounds; hospitals in Bergamo and Milan; high-speed tunnels in Bologna, the Gran Sasso Tunnel (10km under the Apenines); Milan’s historic city centre; offices and exhibition halls; as well as the Milano-Malpensa Airport and commercial malls (e.g. IKEA centres).

TowerXchange: Congratulations on the announced acquisition of CommsCon! What has motivated Cellnex to make this latest acquisition?

Alex Mestre, Business Development and International Director, Cellnex Telecom:

Capturing opportunities in the European markets is key for the development of Cellnex’s project. CommsCon is a story of adding differential value in terms of technology and innovation. It operates in the niche of the small cells and DAS which will drive the telecom infrastructure market in the upcoming years. We are not only going to see rationalisation and decommissioning in mature markets with networks which overlap, but densification and antenna capillarity will be key to make mobile broadband real.

TowerXchange: Please comment on the maturity of the DAS and small cell market in Italy and in the rest of Europe today compared to the forecast that 350,000 such sites could be deployed by 2020.

Alex Mestre, Business Development and International Director, Cellnex Telecom:

What we can say today is that this is an emerging market throughout Europe and the growth potential is huge as it is a technology expected to hatch in the next two to five years.

TowerXchange: Who should deploy and operate this new heterogeneous network layer - MNOs or independent third parties like Cellnex?

Alex Mestre, Business Development and International Director, Cellnex Telecom:

This is not an either/or answer. The key fact is that to reach a level of right coverage that guarantees a mobile broadband service with a very high number of simultaneous users accessing broadband content, we will need a dense network of small cells both outdoor and indoor. Two decades ago coverage and thus network infrastructure ownership was a source of competitive advantage among MNOs. Today the game is about content, services and highly intense data consumption. Infrastructure and network sharing is an accelerator of market penetration, while it no longer seems to be the differentiating factor for MNOs in terms of market share.

The acquisition of CommsCon positions Cellnex as a key player in the development and roll-out of telephony and data coverage solutions in busy areas. By implementing advanced technologies based on ‘small cells’ and distributed antenna systems (DAS) Cellnex can provide services to various operators based on a single infrastructure and equipment roll-out. The densification of networks in open and closed crowded spaces is one of the main vectors of growth in the telecommunications infrastructure industry for the coming years. The industry will not achieve genuine broadband and true mobility unless we can prepare for the challenge associated with rolling out hundreds of thousands of ‘small cells’ in large urban areas - Tobias Martínez, CEO of Cellnex Telecom

Most probably we are going to see parts of these networks being deployed and operated by independent infrastructure operators like Cellnex, and parts of them being deployed by MNOs. In terms of planning and a rationale, as well as efficient deployment and use of the installed capacity, the higher the sharing ratio the better the time to market for this new technology, the lower the entry barriers, and the higher the perceived quality service for MNOs customers.

TowerXchange: How does this latest acquisition fit into Cellnex’s pan-European vision of macro and microcell networks?

Alex Mestre, Business Development and International Director, Cellnex Telecom:

Consistent with the previous question on who should deploy and operate the small cells as a new network layer, we have to say that macro- and microcell networks are not worlds apart. On the contrary both complement each other. LTE deployment will demand a more dense and capillar infrastructure network. Based on small cells, DAS, fibre backbone connectivity to these small cells or to the current macrocells on a typical rooftop that will be connecting via macrowave with the small cells.

Connectivity is becoming increasingly hybrid or heterogeneous in order to get the signal transported to the end-user. Therefore the infrastructure mix will be heterogeneous as well.

We can expect three processes running in parallel: (a) a rationalisation of the existing macrocells passive infrastructure, increasing sharing and tenancy ratios per site; (b) macro cells base transmitting stations growth to cope with densification needs; (b) a stepwise extension of the sharing concept rather than a focus on ownership, in the case of outdoor small cells to be deployed on urban furniture, as well as indoor connectivity based on DAS or small cells too.

TowerXchange commentary: Cellnex continues to futureproof their business model

In a mature telecommunications infrastructure market like Europe, with some macro networks over-built to the extent that there is the potential for substantial decommissioning, much of the organic growth is to be found in small cells, microcells and DAS.

This is not Europe’s leading infrastructure operator’s first foray into small cells, and it won’t be Cellnex’s last such investment either. In fact, conspiracy theorists would ask why a €18.65mn acquisition was being formally announced by a €3.5bn market cap infrastructure giant? Two reasons we’d suggest; one, while small by Cellnex standards, this is a strategic acquisition illustrative of their vision to foster the development of a shared, heterogeneous, pan-European telecoms network. And two, consider this announcement a de facto standing offer to Europe’s other small cell operators: Cellnex wants YOUR business!


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