France’s Iliad in €2bn mobile tower pact with Cellnex Telecom
Telecoms group looks to raise cash and shore up balance sheet
Iliad said on Tuesday that it has signed a €2bn agreement with infrastructure operator Cellnex Telecom, for the sale of its mobile towers infrastructure in France and Italy, as the group seeks to raise cash and bolster its balance sheet.
The French telecoms company, whose share price has dropped by a fifth this year, said that it has entered into exclusive negotiations with Cellnex for the sale of 70 per cent of the company managing its mobile network in France, comprising 5,700 sites. In Italy, Iliad has reached an agreement with Cellnex to sell 100 per cent of the company managing its passive mobile telecommunications infrastructure, which comprises around 2,200 sites.
The announcement, which follows similar infrastructure sales by rivals Altice Europe and Bouygues, comes ahead of Iliad’s first capital markets day in years on Tuesday. The group is seeking to restore trust with investors concerned about its commercial strategy, its ability to generate cash, and a controversial pay scheme for its senior management.
In March Iliad said that it would take longer than expected to reach its cash flow targets and announced that it had begun a process to review a sales of its mobile infrastructure assets to raise cash.
Iliad, whose majority shareholder is its founder Xavier Niel, said that the initial amount to be received from the Cellnex deal is €2bn, and added that it will use most of the cash it collects to strengthen the group’s balance sheet.
“This operation is part of an industrial logic allowing the acceleration of deployments of 4G and 5G networks and multiplying the investment capacity of Iliad,” said Thomas Reynaud, chief executive of Iliad, in a statement. “This operation accompanies the group’s new growth and innovation cycle. It will enable the efficient deployment of tomorrow’s infrastructures for the benefit of all operators and also aims to better respond to territorial coverage issues.”
Iliad said that the transaction will boost its financial strength by reducing leverage by around 1 times earnings before interest, taxes, depreciation and amortisation.