Cellnex Telecom SA, the European telecom infrastructure giant with a market capitalization of $26.65 billion, reported its Q1 2025 earnings, revealing a revenue of $964 million, which fell short of the forecasted $1.08 billion. The company posted an earnings per share (EPS) of -$0.10, missing market expectations. According to InvestingPro analysis, the stock appears slightly undervalued at current levels. This earnings miss has been reflected in the stock market, where Cellnex’s shares fell by 2.78%, with the stock trading at $34.48, approaching its 52-week low of $28.39.
Key Takeaways
- Cellnex’s Q1 2025 revenue of $964 million missed the forecast by $116 million.
- The company’s EPS was -$0.10, below market expectations.
- Stock price declined by 2.78% following the earnings announcement.
- EBITDA margin improved to 83%.
- Cellnex reaffirmed its financial outlook for 2025.
Company Performance
Cellnex reported a 6.3% organic growth in revenues for Q1 2025, reaching $964 million. The company saw an improvement in its EBITDA after lease, which rose to $566 million, reflecting an 8.7% organic growth. The EBITDA margin also saw an increase, moving from 82% to 83% compared to the previous year. InvestingPro data shows the company maintains impressive gross profit margins of nearly 90%, though short-term obligations currently exceed liquid assets with a current ratio of 0.9. Despite these improvements, the revenue and EPS figures fell short of market forecasts, impacting the company’s stock performance.
Financial Highlights
- Revenue: $964 million, a 6.3% organic growth year-over-year.
- EBITDA after lease: $566 million, 8.7% organic growth.
- EBITDA margin: Improved to 83% from 82% last year.
- Recurrent level free cash flow: $351 million.
Earnings vs. Forecast
Cellnex’s Q1 2025 revenue of $964 million was $116 million below the forecast of $1.08 billion. The EPS of -$0.10 also missed expectations, contributing to a negative market reaction. This marks a significant deviation from forecasts, impacting investor sentiment.
Market Reaction
Following the earnings announcement, Cellnex’s stock price fell by 2.78%, trading at $34.48. This decline is notable as it brings the stock closer to its 52-week low of $28.39. The market’s reaction reflects concerns over the company’s ability to meet revenue and earnings expectations, despite improvements in other financial metrics.
Outlook & Guidance
Despite the Q1 2025 earnings miss, Cellnex reaffirmed its financial outlook for the year. The company continues to target €800 million in shareholder returns annually from 2026 and is focusing on operational efficiency and potential asset disposals to enhance financial flexibility. InvestingPro reveals that Cellnex has maintained dividend payments for 10 consecutive years and has raised its dividend for 3 consecutive years, demonstrating commitment to shareholder returns. Subscribers can access 6 additional ProTips and comprehensive financial analysis through the Pro Research Report.
Executive Commentary
Marco Patuano, CEO of Cellnex, emphasized the company’s adaptability and resilience, stating, "We demonstrated our ability to adapt to changing reality." He also highlighted the defensive nature of digital infrastructure, noting, "Digital infrastructure is a defensive asset with a proven ability to withstand economic challenges."
Risks and Challenges
- Economic Environment: Macroeconomic pressures could affect revenue growth and profitability.
- Regulatory Changes: Potential changes in telecom regulations across European markets could impact operations.
- Competition: Increased competition in the telecom sector may pressure pricing and margins.
- Operational Costs: Rising costs, including those associated with the ongoing fiber project in France, could impact financial performance.
Q&A
During the earnings call, analysts questioned the potential impacts of network consolidation and the company’s land aggregator strategy. Discussions also covered the progress of the 5G rollout across European markets and the share price performance relative to financial metrics.
Full transcript - Cellnex Telecom (CLNX) Q1 2025:
Wang Eitan, Director of Investor Relations, Cellnex: Good afternoon, everyone. My name is Wang Eitan, Director of Investor Relations at Cellnex, and thank you for joining us today for our Q1 twenty twenty five Results Conference Call. Today, I’m joined by our CEO, Marco Patuano and our CFO, Ramon Trias, who will go through the key highlights of the period, and then we will open the line for your questions. So without further ado, over to you, Marco.
Marco Patuano, CEO, Cellnex: Thank you. Good morning and good afternoon, everyone, and thank you so much for your time. I’ll start with the key highlights of the first quarter twenty twenty five, which have been marked by consistent execution, reflecting our commitment with our objective. Let me remind that our reported numbers are impacted by a change of perimeter, and there is no contribution for Austria this year in Ireland as only contributed two months in 2025. On a like for like basis, the quarter has been characterized by a solid performance across key metrics.
We have achieved a remarkable growth with revenues reaching $964,000,000 and representing an organic growth of 6.3% in our EBITDA after lease, reaching $566,000,000, implying an organic growth of 8.7%. Once again, we delivered on efficiencies, on which Ramon will give you more details. In Spain, we are implementing a voluntary redundancy plan encompassing around 200 people, which is another example of our efforts to continuously optimize our operations, focusing exclusively on our core activities and improving our performance. A notable achievement has been the successful completion of the sale of our operation in Ireland. This strategic move allow us to further streamline our portfolio, focusing on core markets where we can drive the most of the value and generate financial flexibility.
From a capital structure standpoint, we have secured a new syndicated loan for $625,000,000 for refinancing purposes at a very competitive terms even in the current environment. Another highlight comes from the execution of our equity swap and the progress on our share buyback program, which started upon the completion of the Irish deal. As of the May 2, we have almost completed the program. We have acquired shares for approximately €755,000,000 This transaction reinforced our commitment to returning value to our shareholders and as we shared in previous occasion, 800,000,000 constitutes our new floor for a shareholder remuneration perspective from 2026 onwards. Additional disposal may generate additional financial flexibility.
In summary, we believe our journey today has been marked by the definition of a clear road map, a solid commercial, operational, financial performance and a consistent and disciplined execution. Looking ahead, we are reiterating our guidance, and we will continue showing an undeterred commitment with our promises. So let’s move to Slide five. Here, we just want to illustrate our share price performance compared to the recent evolution of our key financial metrics. In the twenty twenty two, twenty twenty five period, using for this purpose the market consensus, we increased our EBITDA after lease by 36%, our recurring level free cash flow per share by 46%.
We reduced our leverage by 1.3x of the EBITDA, and we started a meaningful cash shareholder return of EUR 800,000,000. In the same period until today, our share price appreciated only 10%, showing a very high correlation in macro factors regardless of our solid business fundamentals. We are a leading tower co with strong and secured growth backed by the largest backlog in the industry and with the longest contracts with the clients. Slide six. The current macroeconomic and geopolitical situation is clearly impacting the performance of the financial markets, but I believe that the European digital infrastructure sector has a unique opportunity to demonstrate against its resilience in complex scenarios.
Compared to other industries, digital in infra is a defensive asset with a proven ability to withstand economic challenges. We have analyzed different potential consequences that, in our view, could impact the sector in the event of a tariff increase, and we believe that we are impact free. Let’s move. The customer behavior. Salinex’s strength sits on its long term B2B contracts with its clients with a complete European focus, ensuring a stable and predictable revenue stream.
Inflationary concerns. Revenue model is robust and visible, with the vast majority of our revenues adjusted to inflation or fixed escalators. Supply chain impacts. Some net strategic sourcing ensure that our operations and our investment will remain unaffected. Recessionary fears.
The telecom sector is seen as a defensive industry due to its reduced exposure to variable revenue streams. Salinex, in particular, has outperformed the broader market during crisis period, such as the COVID nineteen pandemic. Additionally, after assessing the long term expected evolution of the FX, the interest rate dynamics, and the quality of our balance sheet, we expect no impact. Moving to slide seven. We want to provide a quick update of our share buyback program announced earlier this year and which total today is almost completed.
As of the May 2, we have already executed 93% of the program at an average acquisition price of around €33 per share, and we’re expecting to complete the program in the coming days. As I already shared, we believe our stock is undervalued, so this moved us to consider a share buyback as the most dedicated way to remunerate shareholders. And finally, I would like to reiterate our financial outlook for 2025 and 2027 with projected growth across all key metrics thanks to the attractiveness of our business model and the visibility it provides. We demonstrated our ability to adapt to changing reality. We’ve shown the capacity to consistently execute our strategy, and we are creating a solid track record delivering operational and financial result quarter after quarter.
I hand over now to our CFO, Raymond, who will provide additional details on the period.
Ramon Trias, CFO, Cellnex: Thank you, Marco. Good afternoon, everyone. Please allow me to provide, during this section, a bit more granularity on our financial and operational metrics for the period. Let me start reminding you again on Slide 10 that our numbers this quarter are impacted by the change of perimeter as there is no contribution from Austria this year and Ireland has only contributed for two months. This table gives you a cleaner comparison as when as we are removing this effect from our numbers.
On the left, you can see our actual reported numbers. Then if we exclude the revenues and the results from Austria and Ireland, we got the pro form a results. Finally, on the right hand side, you can see that the organic 02/2025 pro form a with very strong growth of revenues and at EBITDA level with more than 6% and close to 9%, respectively. Moving to our financial performance on Slide 11. Our revenues have increased 6.3%, and our adjusted EBITDA has grown 7.7% compared to the same period last year.
Both growth rate growth rates are on a organic pro form a basis. Our EBITDA has increased 8.7% on the same basis, further highlighting our operating leverage and our ability to optimize our operations, enhancing profitability. In terms of cash flow generation, our recurrent level free cash flow amounted to 351,000,000, and its growth will accelerate throughout the year thanks to the normalization of cash items below EBITDA as I will explain later in a bit more detail. Moving to our key operational metrics, we have added 1,216 new sites in the context of our build to suit programs. Our gross collocation reached 1,109.
And in the context of efficiencies, we have undertaken 887 land site actions backed by the creation of our land, demonstrating our commitment to optimizing our assets and driving operational efficiency. As you will see later, we keep on improving our lease cash out per tower. If we move to Slide 12, on the first quarter twenty twenty five, there has been another quarter of consistent commercial performance with ops growing 4.3% compared to the same period last year. This is explained by the progress made on our build to suit programs, which represents 2.5% of the growth coming primarily from France and Poland. In France, as you can see this quarter, we have had an acceleration of the build to suit program, allowing us to accelerate growth within the year.
Net collocations are contributing 1.8% in the period. It will be 2.2% if we exclude the impact of the mass orange impact in Spain. In the first quarter twenty twenty five, net collocations have been lower as a result of the already announced contract with mass orange in Spain. As a reminder, this contract gives our client network flexibility in the short term in exchange for a single longer contract until 02/1948 and additional services to be provided by Telmex. As per this agreement, no impact in revenues is expected until 2026, despite the churn that we see in terms of ops during this year.
If we move to the next slide, we provide you a clearer picture of our performance in the period we have excluded the impact from change of perimeter. We are providing here our organic revenues bridge on a pro form a basis, excluding Austria and Ireland from the first quarter twenty four. And from that base, building our organic revenues for the first quarter twenty five, which has grown at a robust 6.3 with a well balanced mix growth linked to CPI, colocation and business unit. On Slide 14, we have followed the same approach of adjusting the perimeter to look at the specific performance of our different business lines. The tower segment grows organically 5.8% on a pro form a basis.
Fiber and connectivity grew 24%, mainly due to the project with Bouygues in France. Thus, inactive grew 5% and broadcasting services grew 3%. As you can see, we keep having a strong and well diversified growth on all our business lines. If we continue to Slide 15, as part of the strategy set out at our Capital Markets Day and our continued focus on industrial excellence, we have the objectives to become operationally more efficient, rationalizing assets, optimizing our cost base and improving the group’s overall productivity. Here, we’re stripping out the contribution from Ireland and Austria to provide a cleaner analysis of their performance on our different entitlements.
On staff, it is worth highlighting our ongoing efforts to streamline operations and improve efficiency. This reduction in headcount is part of our broader strategy to optimize resource allocation, enhance productivity, and focus on core activities. The numbers today do not include the impact of the recently announced redundancy program in Spain, which will be implemented over the twenty twenty five, twenty twenty seven period. This plan will also result in discontinuing certain operate operation and maintenance contracts with an associated negative EBITDA contribution. As you will see later in the P and L, we have booked this quarter a provision to execute the redundancy program, although the associated cash impact will be seen during the next few years.
On repair and maintenance, following the positive performance last year, we continue to see good progress in the period with costs flat on a per tower basis, meaning that we are saving to compensate inflation. And the evolution of our general expenses translates into a 2.3% decrease on a per tower basis. Finally, on leases, we have been able to reduce the cost 2.3% per tower. Our land acquisition plan is picking up speed, deploying capital at very attractive returns while securing strategic locations for the future. Additionally, our efforts in rent renegotiation and cash advances are well on track, further contributing to the optimization of our operations.
In the first quarter twenty twenty five, we
: have
Ramon Trias, CFO, Cellnex: invested 13% more in land acquisition and efficiency CapEx compared to the same period last year. The results of the strong growth of our revenues and the continuous work on the cost reduction can be seen on the Slide 16. Our efficiency measures are helping to first, absorb inflation second, offset incremental costs associated with growing perimeter third, improve our margins. Our EBITDA margin is 83% versus 82% last year And finally, generate operating leverage. A 6.3% growth in revenues translate into almost 9% growth in EBITDA as Marco mentioned before.
If we take a look at our debt maturities on Slide 17, you can see that there are limited maturities left in 2025 as we have forbade debt with the proceeds from disposals and refinance other maturities via new bank financing, particularly a $625,000,000 term loan at very competitive terms as you can see. We keep working on extending the duration of our debt and flattening the maturities over time to have an even more robust and well designed capital structure. Our liquidity remains high at approximately $4,700,000,000 with our debt being approximately 80% fixed with short term maturities that have been managed. So our average cost of debt will only marginally increase in the coming years. Last but not least, we have been able to execute an 800,000,000 share buyback whilst maintaining our commitments with the rating agencies.
Finally, on Slide 18, you can see
Fernando Cordero, Analyst, Santander: that we are
Ramon Trias, CFO, Cellnex: reiterating again our 2025 outlook, whilst providing visibility on the expected phasing of our key financial metrics during the year. If we focus on the bottom of the slide, it is important to understand the phasing and seasonality of our cash items below the delta. The first half of twenty twenty five will be more in terms in terms of lease and interest payments due to the structure of our contracts and the coupon schedule as it already happened in the first quarter twenty five. Additionally, as you know last year, we did a significant work to optimize our working capital. We ended 02/2024 ahead of our expectation in terms of improvements.
So this impacts the working capital slightly on the first quarter, but we expect this cash item to turn positive during the second half of twenty twenty five. We have already identified measures to keep on improving our working capital. So despite timing effects in the period, we are in a position to reiterate our guidance. And with this, we now remain at your disposal to answer your questions.
Wang Eitan, Director of Investor Relations, Cellnex: Thank you so much, Marco and Raimond. Now your first question comes from Maurice Patrick from Barclays. Please go ahead.
: Yes, good afternoon, guys. Thank you for taking the question and the call today. If I could ask a question about Zegona and Vantage. Sorry to be to go on the old subject, but investors do ask a lot about it. On the last call, when asked about it, Mark, I believe you said it was difficult to replicate the network due to the number of sites and possible gaps in the in the network.
Now Zagong is saying they think it’s just not only possible just to move the equipment as in they can move it, but also many of the existing tower companies are happy to facilitate it. There’s obviously lots of tower codes in Spain. Spain is a special case in point and it is a rapidly evolving landscape. Keen to understand your thoughts on that. And just a small clarification.
In the slides, you talk about the churn. I think it was 733 from Orange, three seven three from others. Can you just let us know where those $3.07 3 is from? That that’d be helpful. Thank you.
Marco Patuano, CEO, Cellnex: Yeah. Sure. Well, on the Degona case, honestly, I have nothing really different from the past to add. So it’s it’s a bit more of the same. So Zagona is trying to force the possibility possibility to move out from the contract.
They still have time. The the contract as we understand expires in 2028, so they still have time. And they’re trying to find to find alternatives. I’m still a bit skeptical that the possibility of moving entirely the the antenna that are under the all or nothing umbrella can find a new a new house, but let let’s see. So I I didn’t honestly change change my view.
On the second part of your question, approximately so it’s it’s a bits and pieces here and there. It’s not a single country that that makes that makes the the the big number. If you take the previous quarters, a number between three fifty and four fifty is is quite usual, quite normal.
Wang Eitan, Director of Investor Relations, Cellnex: I I I I would say that this is specific quarter, so mostly Italy that we we we have seen some some churn. Also, remind remember, Maurice, that that now we are branch sharing is now being classified as a physical POP. So also in the context of the different combinations that we are seeing in Italy, we are recently we have seen this quarter in q one, some disconnections of these branch selling POPs. So I would say, yeah, that the main explanation comes from Italy, but also given that we are removing branch selling POPs, also the associated revenues are so quite quite modest.
Marco Patuano, CEO, Cellnex: Quite modest. Yes. But, again, if you if you I made the same exercise as you did, I made the I went backwards quarter quarter after quarter to in order to see what was a normal churn rate during during the different quarters, and it stands normally between three fifty and four fifty. So it’s pretty normal.
: That makes sense. Okay. So so so it’s it’s quite normal to see churn. We just don’t normally see it. It’s only because it’s large this quarter you’re calling it out.
That’s helpful. Thank you.
Marco Patuano, CEO, Cellnex: You’re welcome.
Wang Eitan, Director of Investor Relations, Cellnex: Next question comes from Andrew Lee from Goldman Sachs. Please go ahead.
Andrew Lee, Analyst, Goldman Sachs: Good afternoon, everyone. I had a couple of questions. The first one is just there’s press speculation today on suggesting that you’re into the end game in your Swiss, asset sale process. Don’t expect you to be able to speak too specifically about that, but just wondered what that process has informed you of on the attractiveness of selling infra assets at the moment to private investors. Haven’t heard mention of your French data centers or the Dutch business recently, but kind of any kind of broader thoughts you could give us on the merits of selling assets at the moment, be it for valuation premium or simplifying your role?
And then, second question, just irrespective of the Swiss sale, should we expect that the next shareholder returns update you give us will be, at the end of the year in terms of buybacks and dividends and not before that? Just thinking about kind of how we should think about, your shareholder returns profile. Thank you.
Andre Kavisek, Analyst, UBS: Yeah.
Marco Patuano, CEO, Cellnex: Sure. Let’s take the the disposal of the asset rotation more more broadly. In our case, we have the the French data center in which we entered into a bilateral into a bilateral conversation, which normally tends to be fairly straightforward. So on the French data center, I would be surprised if it derails. But, you know, you never know because because ultimately what we made clear or very clear is that we are not forced seller.
And not being forced seller put us in a in a better position than than before. The one said that before, we were forced seller, but the target of delivering deleveraging and the target of accelerating the shoulder return was quite stringent. And today, if we get the price we want, we do it. If we don’t get the price we don’t we want, we we don’t we don’t do it. On the Swiss, so the speculations are saying that we should receive in the in those days some informations about what is our market testing, which is correct.
Between now and the next week, we should receive the what are the the nonbinding the nonbinding offers for an asset like Switzerland, and more or less the same as I said before. So if the the price is is interesting, we will will go to a phase two. Otherwise, we will drop it. I can’t tell you in the moment at the moment, give you more color on this, but for the simple reason that I don’t have more color on this. So as soon as I have, we can we can comment on this.
Ramon Trias, CFO, Cellnex: I think on on your second question regarding the DSR, as you know, we committed to 800,000,000 this year that we have already done through share buyback. We said that next year is gonna be also 800,000,000. That’s gonna be the floor. And that if there is any other asset rotation this year, we might consider extending the shareholder remuneration. But it it’s difficult to give you any kind of timeline on any change on that from what we have already committed because first, we need to see if there is any further asset rotation.
Andrew Lee, Analyst, Goldman Sachs: Thank you. That’s really helpful. Can I just have one quick follow-up just on your answer to Morris’ question? Are you able to give us the exact amount of Mace Orange disconnections that you had in the first quarter? Or yeah.
Or and and what you’d expect in the second quarter? I’m I’m not sure we’re able to calculate that from
Ramon Trias, CFO, Cellnex: I think, Andrew, on the slide 12, you have Yep. The churn of Maserati in the first quarter has been 733 bobs.
Andrew Lee, Analyst, Goldman Sachs: That’s all that’s all pure disconnections from that contract as a result of the contract?
Wang Eitan, Director of Investor Relations, Cellnex: Correct. Correct. So I can tell you that those are disconnections expected, but also with no associated loss in revenues in Gen twenty five. Yeah. To make to make clear, the the way we discussed with is
Marco Patuano, CEO, Cellnex: to decouple the industrial or, if you want, technical flexibility were given to them to the financial impact of this technical flexibility. So if they want to start tomorrow morning to redesign the network, to move assets, to move antenna, please do it. And and we designed a cash profile of their commitments that gives some flexibility this year and the next year, but it’s not a sort of a p per coup. It’s it’s not a it’s not a one to one. You move an antenna, you get a discount for the 10 a move.
And this Thank you
Roshan Ranjit, Analyst, Deutsche Bank: very much.
Marco Patuano, CEO, Cellnex: This was very much appreciated by the technical team of of Mazor and so because they can start immediately doing doing things. That’s
Andrew Lee, Analyst, Goldman Sachs: great. Thank you.
Wang Eitan, Director of Investor Relations, Cellnex: Welcome. Thank you, Andrew. Next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.
Roshan Ranjit, Analyst, Deutsche Bank: Great. Afternoon, everyone. Thanks for the questions. I’ve got two, please. Thank you for providing the Slide 18 on the phasing.
Is it possible to get a sense of the absolute kind of working cap number for the full year? I think previously, you said small positive neutral and also you’re thinking around the interest component, bearing in mind the buyback, the $800,000,000 buyback will be completed. And secondly, maybe just going back to some of the previous questions. 93% done of the buyback where should be completed by the end of this month, as you said. What was rationale between for executing it so kind of quickly, obviously, maximizing the lower share price?
Is it with a view to have that flexibility towards the end of the year if you wanted to do something different or something extra, sorry? Thank you.
Marco Patuano, CEO, Cellnex: Okay. Raymond will take the first. I’ll take the second. This is Raymond.
Ramon Trias, CFO, Cellnex: So on on the working capital, as we as we explained, last year, we put a lot of focus on on the working capital at the receivables, at the suppliers as well, trying to first reduce over dues, try to improve payment terms from customers, but at the same time, to improve payment terms with suppliers. We did a great exercise, I would say, from June till December and specifically in the last quarter when we improved a lot. And at the end, that even had an impact compared to this first quarter. No. Why?
Because we even managed to achieve some collections in the last quarter that we were expecting probably to have in the first quarter. So this quarter, we have had this negative 20,000,000, but we have identified already a lot of measures to be implemented still within receivables and within the supplier side. We still have overdues to improve and we are putting we’re still putting a lot of focus there to keep on reducing. And what we are planning is that we’re gonna finish in line with the guidance that is positive in terms of working capital for this year.
Marco Patuano, CEO, Cellnex: Good. So your question about about the the accelerated path of the buyback, you know, that the the share price the the the sense of of the chart I made showing our medium term improvements and the dynamic of of our share price give you the sense why I consider that it was a good idea to try to accelerate as much as we could our share buyback in the first part of the year. It’s still quite unpredictable what is going to happen with The US with The US rate. So possible a decrease in the rate, more difficult to predict put a to predict the calendarization of this of this reduction. And I honestly, the the only explanation I can give for the the delta between our improvement in the in the industrial metrics and the improvement in the share prices because of the macro factors that are representing a headwind on on our share price.
So this is why we decided to accelerate and to try to make it as soon as we can. And by the way, this is the reason why we also performed an equity swap that give us another 550,000,000 of shares that we can buy at the at the price that we already fixed and predetermined in in q one this year on between q one and no. It was q one. In q one this year, which would be, again, very accretive. Now going forward, if if in case we have a further flexibility for making something more, we will immediately look to the to the share price.
If the share price is too convenient, we will go for that.
Wang Eitan, Director of Investor Relations, Cellnex: There was a pending question, question, I think, on on interest for 2025. So the the figure that we are contemplating is around 400,000,000. That includes the incremental impact from the incremental debt associated with the Survivac program. So the despite the, I would say, the heavy concentration of interest payment in q one, we are not changing our view for 2025.
Roshan Ranjit, Analyst, Deutsche Bank: That’s great. Thank you very much guys.
Wang Eitan, Director of Investor Relations, Cellnex: Thank you. Thank so much. Next question comes from Amit Kelly from Morgan Stanley. Please go ahead.
Amit Kelly, Analyst, Morgan Stanley: Yes. Good afternoon, Marco, Raimo and Juanjo. Thanks very much for taking my question. My question comes back again to Slide 18. So that’s a super duper helpful slide for looking at the phasing of leases, tax.
My question is actually really though on the phasing of EBITDA growth, please. I think I probably need a little bit better eyesight to figure out what’s going on EBITDA Q1 to Q4 in your slide. But if I just look at the numbers, EBITDA fell about EUR 65,000,000 quarter on quarter between Q4 and Q1. And just looking like the last couple of years, EBITDA has increased sequentially between Q4 and Q1. Now I know there’s been a few kind of exceptional items in there for Q4.
I know there was the loss of the Austrian and Irish EBITDA, which you mentioned, Marco. Can you just say a little bit about what’s going on underneath the hood? I think there’s something going on in terms of the engineering works that you guys are providing for telcos and maybe some other elements as well. So how should we look at that EBITDA number evolving, let’s say, q two to ’4 this year? Thank you.
Marco Patuano, CEO, Cellnex: Yes. I start giving you the the the first part, and then, Raymond will complement with further details. Yes. You you touched two big two big offenser. One, of course, is the discontinuation of of the operations in in in Ireland and Austria, which it fairly it is fairly material.
And so the the the majority of the number comes from there. And you have three months not having Austria and one month of Ireland that we don’t have. That’s
Ramon Trias, CFO, Cellnex: part of the terms.
Marco Patuano, CEO, Cellnex: Yeah. So it’s it’s it’s quite material. And so this is why Ramon made also the the the apple and apple. There is I don’t remember exactly the number of the chart in which you restated all the numbers. We choose chart number 10, which I think it’s very helpful because at least at least it gives you the sense of what is this component.
Then you were mentioning the engineering services, which is another part of of the of this activity. Engineering services move together with the the how can I tell you? The the activism of our of our clients, which tended to have seasonalities. It’s thirty years that I’m in this industry, and it’s thirty years that I’m trying to understand why engineers are trying tended to move their feet more in q four than in q one. But it is exactly what happens every year that Gong gives us.
The point is that in q four twenty four, our client had a a sort of hyper activism in this in this. And in q one, possibly, they take they took an app. And and so the there is a there is a bit of difference coming from there. Nothing that puts at risk the total number for the year. But the calendarization, yes, it’s true that the calendarization this year, or if you want the seasonality this year has been a little bit higher than than what has been the the previous year.
Ramon, if you want to complement.
Ramon Trias, CFO, Cellnex: Just to complement on the engineering services, you you will see that the main difference come from from France. You know, that is the place where we had most growth in the last quarter and then less growth this quarter. And then you were mentioning also, Amit, the one off, and it’s like that also in the fourth quarter. If you remember, we have this fine in Spain that we released a provision for 18,000,000 because we won the case, and that impacted one of the lines of cost as well. And that was explained during the the end of the year.
Amit Kelly, Analyst, Morgan Stanley: Super. That’s very helpful. Thank you both. Thank you.
Marco Patuano, CEO, Cellnex: Thank you. Thank you.
Wang Eitan, Director of Investor Relations, Cellnex: Next question comes from Rohit Modi from Citi. Please go ahead.
Rohit Modi, Analyst, Citi: Hi. I hope I’m audible. Thanks for the opportunity. Just a couple from my side. Firstly, I’m not sure if I’m reading too much into it, but your Marco, your recent comment around growth in UK, Netherlands, Spain, you know, once this all all complete.
And also a statement from the Chairman around, you’re looking at $5,000,000,000 CapEx investment opportunity over next three years. But if I look at your CapEx guidance, in terms of implied CapEx guidance, that’s around $4,000,000,000 Just trying to understand if there’s like more investment that you’re looking into any of the markets in next few years. Any color on that? Second, on the on the on the land aggregator, regulation that have been you have been you have been mentioning a couple of times in past. What how do you see what kind of risk do you see around around the land aggregator issue that you’re facing?
And lastly, equity swaps. Just wanted to understand if you want to continue the equity swap with this buyback or it will probably terminate. Any any view around that? Thank you.
Marco Patuano, CEO, Cellnex: Okay. Good. So on the on the on the future on the future growth CapEx, I think that the vast majority of the growth CapEx will stay linked to the towers. We have to end the fiber project. The fiber project in France is I try to remember by heart, should be a sort of the remaining CapEx, I’m asking to my colleagues is sort of 200,000,000 I have in mind by heart if so if I’m wrong, we will pass you the the number, but I don’t think I’m I’m materially wrong.
Raymond is telling me that I’m right, so good as a former CFO. Mhmm. The when I look at to markets where I see possibility for for having a network creation, I would I I continue to think about France, will they will continue to have network creation. UK would continue to have network creation. Poland is going to be for us an important market for making both a a network creation and a network rationalization program.
Mhmm. This is going to be quite quite quite important. And then the land, you have to imagine it’s something between $2.50 and 300,000,000 a year. So this is this is another number that that easy to come to to my mind. Landed brings me to answer to your question on the land aggregator.
So thank you for making the question because I want to make it very clear. Point number one, I have nothing against land aggregator if they do the land aggregator. So the land aggregator who have cheap funding go and buy land and then turns to us, and they become the new landlord instead of being the farmer is a is a land aggregator, I am nothing against. And I tell you that eventually, it’s a more professional counterparty. It’s someone that you optimize the the administrative component.
So many things. Sorry. There is some noise around us. I hope it does not disturb the communication. What I’m not strongly against is the land aggregator, Hutan, Hutan try to have a unfair return on their investment, which mean they get the right on the land, then and they turn to us, and they try to have an undecent profit with us.
This is something that I consider simply not in the interest of my clients, not in the interest of the community, because we end up reducing the the the the coverage, and it’s going to be something bad for the entire system. We’re going to fight this attitude as much as we can, and we will fight it hard. We’re not going to let them put us in a corner. We will fight, and we will fight hard. I hope that I’ve been I’ve been clear and polite.
Equity swap, as of today, we don’t see the the the possibility of having more equity swap. Today, we have 550,000,000 in that we bought in two different tranches. The price we we made for the for the 550,000,000 is around €32, so which is very nice. And and and the financial component of the equity swap is very well priced. So it it remains a very attractive price even if we wait a little bit to exercise it.
So this is we we don’t expect in the in the near future to have more equity swap.
Ramon Trias, CFO, Cellnex: The the the maturity of the existing equity swap is June 26. We could accelerate if we wanted, but if not, we’ll have until June 26.
Rohit Modi, Analyst, Citi: Thank you.
Wang Eitan, Director of Investor Relations, Cellnex: Thank you, Roy. Next question comes from David Wright from Bank of America. Please go ahead.
Marco Patuano, CEO, Cellnex0: Yes. Thank you, guys. Just a slightly different question. Some of the tower co is talking more about owning the RAN as part of the tower contract and providing synergies upstream to the operators, potentially sharing the RAN a lot more. I know there is already some RAN sharing in place, but I just wondered are you thought about extending the sort of traditional tower model upstream a little, let’s say, into the more active equipment?
I think we’re all broadly agreed that sharing telco networks is only ever a good thing really and provide synergies to potentially everyone. I just wondered how you thought about that evolution of the business model within your business plan. Appreciate it’s a little more hypothetical right now. Thank you.
Marco Patuano, CEO, Cellnex: Hey, David. Okay, David. Well, as you know, we already have this model in place in Poland. So possibly, I’m the only one in Europe who can talk about the topic having a direct knowledge of the of the of the stuff. See, you get synergies if you have a network, that serves more than, than one, than one MNO.
If you have one network, which is serving one MNO, you can make it more efficient. You can rationalize. We are pretty good. And by the way, we have less constraint in in being more efficient than than some of our clients. But the real efficiency, you get the real efficiency if you if you have two networks.
You combine the two networks, and you make a single network. This is the way you make you make real because you make efficiencies every time there is a change of generation. Because instead of making two carpets, you make one carpets, and you have synergies on OpEx, maintenance, transmissions, everything, energy, you make you make synergies. So I personally see more headwind than tailwind going forward in in having these these rankos for the mobile. For the mobile, it’s a little bit more complicated than for the fixed because you have to involve the use of spectrum, the allocation of the spectrum, the ownership of the spectrum.
So it’s it’s a bit more complicated than than in other cases. To say the truth, we are we are working we are learning in in Poland. Hard for me to believe that in the short term, we can replicate these in other countries. The the investment profile is honestly different from the investment profile of the TowerCo. The investment profile of the TowerCo is something that you put the money upfront, and then you marginally upgrade or you marginally change it during the life of the of the investment.
But the big investment is day one, and then you go for twenty years. When you are in the run code, you you make a you have an investment cycle every five, six, seven years because of new generation. So now we are we have the five g, and and six g is already beyond the corner. Then we can argue if a six g would arrive sooner or later. But in the Far East, they are really already starting, really talking about six g.
So in in our case, is is something that it’s not easy to imagine Sunnex have invested in in RAN or in, as we say, RAN as a service. Having said that, where we are, we are not unhappy, and we are learning a lot. And and it’s it’s a good it’s a good it’s a good business for us. Possibly, I see brand calls being created and being not necessarily integrated with the
Amit Kelly, Analyst, Morgan Stanley: Thanks for your
Marco Patuano, CEO, Cellnex0: answer, Marco. Nice to speak
Andre Kavisek, Analyst, UBS: to you.
Marco Patuano, CEO, Cellnex: Thank you. Thank you, David.
Wang Eitan, Director of Investor Relations, Cellnex: Next question comes from Andre Kavisek from UBS. Please go ahead.
Andre Kavisek, Analyst, UBS: Hi, everyone. Thank you for the presentation and for allowing me to ask questions. I’ve got two questions. One is a bit higher level. Just on your built to suit contracts and how well protected they are legally in terms of future growth.
Because, obviously, when you have a a potential merger in one of your market, if there’s a party merging that’s got an outstanding both to suit contract with you, then, you know, the the future growth from the sites that you have not yet filled, how well is that legally protected in the sense that this is or was reflected in the multiples that underwrote the deal in the first place? So we always talk about the current perimeter of revenues being very well legally protected. But how is this the case for revenues that are not yet kind of in the ground in terms of power is not yet built? If you could elaborate on that, please. And then the second question is more of a follow-up just on the mass or into a mass mobile situation in Spain, where obviously, you’ve seen slight decommission as you report.
You say no impact thus far on revenues. But I guess we’re correct in assuming that over the next five years, there will be a dip somehow before you recoup revenues for the new services that you highlighted in the press release, maybe three, four, five years down the road? Or is that still kind of the expectation? Thank you very much.
Marco Patuano, CEO, Cellnex: Okay. So sorry. I I hope I understood perfectly correctly because it was a little bit disturbed, the the line. So the BTS in case if the BTS agreement stays in place in case of a of a merger of two of two clients, It’s not necessarily true, but this is an easy an easy discussion to have with the with the merging entity. Because if they if they really continue to need it, we are happy to to maintain our CapEx allocation.
If they don’t want it, they don’t have just to tell us, and we don’t put the CapEx and possibly we’re renounced to a little bit of of of CapEx with with this client, but we can reallocate the CapEx of growth with other clients. Today, the problem is not that clients are not asking us to make more towers. The problem is that we are disciplined. We have a maximum framework of CapEx that we want to put on the on the field every year. And so sometime we say no.
So if if I cancel someone on the right hand, possibly, I can put the money on the left hand. But it would be an easy conversation with the with the merging entity entity because it’s it’s useless to force someone to have something that they are not interested in. And so it’s a that’s that’s not okay. The mass orange case, yes, you’re right. So it goes down, but it’s mid single digit
So so let’s say $4.05 millions. And and when we recover, we recover a little bit more because we intended to recover including the financial effect of the displacement of the time displacement of the two events. So you reduce first and you recover later. So you cannot recover exactly the same amount. You have to recover a little bit more.
But it’s something that is it has been designed together with the client. So the client is perfectly aware, and it’s a hard commitment. And this is important. It’s a it’s a take or pay commitment. So, of course, nobody likes to pay for nothing.
So I assume that they will use the commitment for which they’re going to pay.
Andre Kavisek, Analyst, UBS: Thank you, Marco. If I can just follow-up on the first point around build to suit, please. Because I guess my point was, yes, you can allocate capital elsewhere. But if you do exit or if your client exits from a build to suit program, you are losing future growth that is currently expected, and that expectations was was built into the, you know, transaction multiple, if I’m thinking about this correctly. So so, you know, is that the correct kind of way to think about it?
Or Yeah.
Wang Eitan, Director of Investor Relations, Cellnex: Let me let me let me try, Andre. Bear bear in mind that our build to suit the economics of our build to suits are are are more similar to the original M A transaction rather than organic, if you like. Okay? So if you compare the average cost per tower, it’s very similar to the initial M and A transaction and also the associated EBITDA per tower is also very close. So, again, the economics of the are very similar to the M and A.
So, yes, clearly, if, we don’t continue with some of the ongoing we don’t see the associated EBITDA, but at the same time, we save from the CapEx. So I don’t I don’t think that that any any discontinuation would change the original return of the project.
Marco Patuano, CEO, Cellnex: Yes. I agree. You have to imagine some of those contracts which were including build to suit as a a with a with a forward with a component which has a forward execution. That that’s it. That’s the way you are to to read it.
Andre Kavisek, Analyst, UBS: Okay. The equal returns. And it’s, I guess, the the thing that I was missing. Thank you very much.
Marco Patuano, CEO, Cellnex: You’re very welcome.
Wang Eitan, Director of Investor Relations, Cellnex: Next question comes from Otavio Dorisio from Bernstein. Please go ahead.
Marco Patuano, CEO, Cellnex1: Good afternoon, gentlemen. I have a couple of questions on my side. The first is a follow-up from what Marco said about the land aggregators. It’s clearly, you you like them if they are fair. You don’t like them if they are unfair.
But I just want to see if they are unfair, which are the tools for you to avoid the contract being terminated? Because from memory, your average leasing contract on the land is significantly shorter than the average contract on the towers here with the clients. So if the basically, that contract reached the end, expire, and it’s not been renewed, how are you going to cope with this? Especially if the land aggregator will have significant amount of land where you can actually build anything around so he can provide the service. The second one, it’s on the, it’s a follow-up on the orange, but more on The UK.
So in The UK, you also have a similar situation whereby you’ve given some flexibility to, to the client’s Vodafone. It’s a different sort of agreements, but you never really disclose how the agreements work. So should we expect also the Vodafone some dip on the revenues in the short terms with a compensation medium long term or the revenue cycle is slightly different? And the third one, it’s just a follow-up when, this two we want when you say basically on the M and A that the BTS is a similar business model. From memory, you don’t build any towers.
So the towers are built by the operator, so you just buy the towers. So that’s the reasons why, I mean, either you do on BTS or you do an M and A, it’s exactly the same transaction. Is that correct?
Wang Eitan, Director of Investor Relations, Cellnex: K. That is that is yes. Yes. To finalize that, that that is correct.
Marco Patuano, CEO, Cellnex: It’s it’s partially correct. Partially correct. Think it’s economics. Yeah. Yeah.
It’s partially correct because we build approximately one third of of the towers that are in in the in the CapEx programs. So two thirds are built by by the operator who sells us with a similar model. One third, we build, and and we have the full responsibility. But the fact that you build or someone else builds doesn’t change very much the economics of of the program. What changes is, let me say, the activity that our engineering department has to do.
So on land aggregators, land aggregators point number one is our contents are the duration of our contents is longer. The average duration is longer than what you could expect. The average duration of our contract is more than twenty years. Average. So like every average, it means that there is something that is expiring tomorrow morning, and it’s something that expiring in fifty years.
The big effort the big effort we are making there is it’s a tremendous exercise we did in the last twelve months is putting all the data of all the contract into a single big data lake and adding some artificial intelligence on it and starting making analysis on what is more at risk and what is less at risk and and which kind of fatality has the risk. If I lose a rooftop in the heart of Paris, it’s not the same that if I lose a land in Provence. I can replicate in one case and hard to replicate in the other case. So what we do is is the following. Where we have site at risk, we call it SAR, site at risk.
When we have a site at risk that our AI tells us that replicating it will be a nightmare, we run for buying the land immediately or extend the contract as much as we can. If a land is in an area where we can have an easy alternative solution, I can’t tell you that I’m happy, but it’s less urgent. And if someone comes there and and wants to to have a a nice fight, okay, we say several bad words, and then we start building a tower in the in the in the field next to to the to the first one, which I tend to dislike because I spend money for dismantling a tower. I spend money for rebuilding a tower, and I have to ask puzzles to my client because I will give him a bad service for at least two, three months. But we will never say yes to someone who wants to blackmail us.
I hope I was I was more clear than that. The orange sorry. Not the orange. The The UK merch, Caucasus. Yes.
It’s slightly different, but it’s not at the end so so different. It’s slightly different because, first of all, the timing of their network redesign has not been as as quick as Mass Orange. Mass Orange, the day after they got the authorization, they started building this mountain moving. So they’ve been hyperactive, and and I like active people. In The UK, they are they are taking a little bit more time and and but the the the concept is not very different.
So there is one thing that is the capacity to move or the permit that a mineral has for moving assets, And then there is there is the financial profile, which is more linear than what is the the movement of the towers. So, yes, it’s a bit different. The underlying concept is not very different, Octavio. I hope I have
Marco Patuano, CEO, Cellnex1: Perfect. Thank you very much.
Marco Patuano, CEO, Cellnex: Thank you. Thank you, Tatavio.
Wang Eitan, Director of Investor Relations, Cellnex: Next question comes from Luigi Minerva from HSBC. Please go ahead.
Marco Patuano, CEO, Cellnex2: Yes. Good afternoon, everybody, and thanks for taking my question. It’s a topic we often discuss with investors, and it’s about, you know, the influence on the equity story from a macro and rate. And I guess, you know, the question is whether there is something you can do as a company to decouple your equity story from the rate cycle or, and, you know, and this may be operational actions, maybe balance sheet actions, or should we just accept that, you know, this is a long duration asset and, nothing to do? You are exposed to the to the rate expectations, volatility.
Thank you.
Marco Patuano, CEO, Cellnex: If someone has the magic answer, please please write me an email. Don’t wait until tomorrow because I would love it. So I take only the part on the on the balance sheet. Possibly, you mean, what if we deliver more? And, of course, we are we are thinking what if we deliver more.
But I’m conceptually in a dilemma because if possibly it’s true that that in a higher for longer scenario, it should deliver more, which it’s it’s improving how long this this higher for longer. On the other hand, I have to consider the profile of my contracts. I have twenty, thirty years contract, highly predictable, covered against the the the the inflation. And every time I look to the intrinsic evaluation of our business, ultimately, it’s a DCF. Now, if I deliver too much, my WAC goes up.
And if my WAC goes up, my DCF goes down. So, you know, it the the it’s a bit of a dilemma of of the reason here in which in which on the one hand, a higher for longer scenario suggests a lower a lower or if you want a more aggressive deleveraging. And if you look at to your cash flow profiles, what suggest to you is not to go too low. So let me put this way, Luigi. If we will stay higher for longer, the the the leveraging takes possibly could take more momentum.
Today, we are not really convinced that rates can eventually even go up. We’re still in a in a macro in which every time we talk with macroeconomist, they say sooner or later this is gonna is gonna go down more than up. So our our idea of moving in the direction of 5.5 stays there, and then and then we’ll see.
Marco Patuano, CEO, Cellnex2: Thank you, Marco. Appreciate your thoughts.
Marco Patuano, CEO, Cellnex: Happy to have separate conversations with each and every of you if you have a different view. No. I’m serious. If if you if you have different views that that there is another thing that that drives me crazy, Luigi. I have not even a penny in in US dollar, and I’ve linked it to the US dollar rate.
And we have a correlation to The US rate that is higher than the correlation of the American peers. It would make no sense. No?
Ramon Trias, CFO, Cellnex: Yes. But probably, it is true that they have a lower leverage. So we have committed Not all
Andre Kavisek, Analyst, UBS: of them.
Ramon Trias, CFO, Cellnex: Not all of Not all of them. But we have we have committed to reduce leverage. And we’re still on the way. So probably, what we have seen is that our correlation that was very high has a slightly reduced a little bit, but we are not yet as the other. And hopefully, as we keep on deleveraging and reaching the five to six times, we will see a bit an improvement, but it’s not gonna be
Marco Patuano, CEO, Cellnex: None nevertheless. And there will be a correlation. Yes. Nevertheless, we’re correlated to US dollar 10 year and not to the euro 10 year. I I understand that that our investors have most most of them invest from portfolios that are US dollar denominated.
So this this is the obvious explanation. But if you look to the intrinsic value of the company, it’s it’s like saying that I have the the revenues that are linked to inflation, European inflation, and so European rates, but you make a discounted cash flow based on the US dollar rates, which is at least strange.
Wang Eitan, Director of Investor Relations, Cellnex: Perfect. And last question comes from Fernando Cordero from Santander. Please go ahead.
Fernando Cordero, Analyst, Santander: Hello, good afternoon. Thanks for taking my two questions. The first one is related with the efficiencies delivery that you have already shown in the presentation. I would like to understand how confident are you regarding sustaining these unitary cost per tower OpEx control? In that sense, at which extent do you require additional, let’s say, efficiency CapEx when talking on the OpEx excluding leases to maintain this, let’s say, efficiency level at a per tower basis?
And the second question is on the whole discussion about MNO consolidation in Europe and what would be the impact in CapEx. I would like to understand and given your knowledge on the ground on the side, of course, how do you define the pending investments in five deployment in different markets where you are already present?
Roshan Ranjit, Analyst, Deutsche Bank: Thank you.
Marco Patuano, CEO, Cellnex: With enthusiasm, Ramon takes the first, and and I will take the second. Thank you, Marco.
Ramon Trias, CFO, Cellnex: So Fernando, as as you know, for the past twelve, eighteen months, we have been working a lot on trying to improve the analytical information that we have in the company. We have developed tools inside the company to understand, first, what is the profitability and the cost on a business line by business line and a country by country. We have divided also the p and l by what we call commercial expenses, what we call operational expenses, land expenses, SG and A, so that we are able to identify which cost, for example, are more fixed, more valuable, which ones are leaks to volumes, which ones are linked to sales rather than cost linked to towers directly, you know. And and based on all that, Simon and the team have been doing a lot of internal benchmarkings to understand who are the best in class in the different categories. And and we have done exercises on trying to understand, so how many towers every person is managing and things like that to keep on doing savings.
As you’ve seen, we are managing to keep the cost below inflation and even reducing the cost per tower in some cases. And we believe that this is gonna be kept during the year. That’s what we are planning. We have put targets to all our teams to keep on improving, and we have created this benchmarking activity that we mean we meet every month along the different countries with the CTOs, the CFOs, etcetera, to make sure that we have the best in class and everyone has to tell and improve to that level. And then we create initiatives actions to make sure that we get there.
So from that perspective, that is working. On top of that, the operations team has developed the ABC sites. We have now a p and l, not just by country and by business line. We have it on a site basis. And we are now looking on a site basis to understand which sites are having the highest direct cost to see how we can mitigate and reduce those direct costs to keep on saving and improving the cost per tower on a monthly and annual basis.
Marco Patuano, CEO, Cellnex: Yes. Sorry. To complement this, I think that going forward, you will see more rationalization projects. Rationalization projects are projects in which I have two towers to close each other, which impede possibly both of them with tenancy one, which impede that tenancy ratio because they are too close. So possibly, not only what we were calling collocation to suit, avoid to build, but what if you already built?
So is it possible to have a rationalization project? And with with Simone, our COO, we are working and we are working on Poland. We’re working on France, which are the two countries. Then Italy possibly could be could be another case. So this is this is something that that, let me say, to be more mid term than short term can can become very, very interesting and attractive for making the for making the synergies.
Now your second question is five g rollout by country or or where is Europe? Well, Europe is a bit a bit a mixed situation where, not surprisingly, countries with three operators and with a higher ARPU have a better network quality than others. So if you take, for instance, Switzerland and Netherlands, they have very nice very nice network quality, which means that there is that the market is stable for us. It’s a good cash generation, but it’s not so much growth. So we are talking market that are very solid, and they are going to work on special situations.
Subway, the indoor, that that, of course, can represent for us further growth opportunity, but it’s it’s what it it is what it is. If I say today, what are the two cases that we are monitoring closely closer in terms of five g needs. Poland is for sure number one, and and UK is number two. UK, the the CMA have is pushing the Mergeco to go to 26,000 ops, and all the other operators are between, let’s say, seventeen and nineteen. So hard for me to believe that if you have one operator with the quality coming from 26,000 installations, the other can stay at 17 or 18.
So there will be a catch up. Mixed feeling for for France. France has a a nice five g in in urban areas. And when you get out from the urban areas, the situation is very different. You have decent five well, you have five g, not even this.
Have five g on on the traffic routes, the major traffic routes. And when the more you enter in the countryside, the more you start suffering. And and France has a lot of countryside. By the way, this is something that even the government, the French government, is considering. They had a first project, which was Vincent, do you remember the name?
The new deal was the the name of the project that was a program project, and I think a new deal too. So how to continue to push operators to improve the coverage on on those. Italy, Spain, to stay on big markets, the the quality the call the average quality is not bad, but then it depends if you’re future proof or not. I think that if the traffic continue to grow with the current path, they can be considered that the improvement can be marginal. But if AI kicks in a bit more strongly on the consumer side, also those networks are not are not okay.
So network okay today, I would tell you Netherlands, Switzerland, Austria, and and not so many more. The Nordics, Sweden, and Denmark Sweden and Denmark, they are really in the in the phase of thinking which kind of network rationalization they have to do. Denmark, they have a relatively good five g, but fairly inefficient. And Sweden, it’s a it’s a strange topography because you have the coastline in which you have you have to deliver a good service. And then the more you go north, the more you you you find Santa Claus.
Mhmm. And and it’s difficult to to give coverage to the to the peers. So it’s it’s a it’s a bit difficult. Portugal Portugal, they have a they have a a a relatively good network. All the operators have good networks.
By the way, they performed honestly quite well during the blackout. They suffered. They they had an interesting performance. So it means that their networks are, to say the least, what we like. I hope I answered, Fernando.
Fernando Cordero, Analyst, Santander: Yes. Many thanks for the capillary can be answered, Marco and Raymond.
Wang Eitan, Director of Investor Relations, Cellnex: Perfect. So we have reached finally the the note session. Thank you so much for your time, and have a fantastic weekend. Take care.
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