Calnex Solutions plc

Good morning, everyone. My name is Juan Gaitán, Cellnext Director of Investor Relations, and I would like to thank you all for joining us today for our Q1 2023 resource conference. As always, I'm joined by our CEO, Tobias Martínez, our CFO, José Manuel Aiza, and our Deputy CEO, Alex Mestre, who will lead today's session. We will now show them in highlights of the period, and then we will open the mind for your questions. As a reminder, if you wish to ask a question, please press Start File on your keyboard. So without further ado, over to you, Tobias.

And thank you, Pablo, and good morning, everyone. And thank you so much for your time today. I would like to start highlighting that Cellnix, once again, providing a solid quarter, both commercially and operationally, and that while the new CEO search process is well on track. The whole organization is aligned and fully committed to the execution of our strategy and meeting our public targets. Of course, this also applies to our board of directors who completely endorses our new capital allocation policy, which will remain in place and guide our actions regardless of leadership changes. Therefore, today, I would like to take the opportunity not just to provide some additional color about the quarter, but also to insist on the main characteristics of the next chapter of our equity story, which will be focused on execution, maximization of cash flows, and an unconditional commitment to investment rate ratings. The period has been marked by an excellent commercial performance and a consistent operational execution, with POPs increasing close to up 7% compared to last year, revenues increasing 15% excluding pass-throughs, our adjusted EBITDA 15% and our recurrent leveraged free cash flow 12%. This will constitute the sell next pattern going forward and increase focus on organic growth and continue progress on the crystallization of efficiencies and synergies. in order to make sure that our OPEX leases remain under control. The next chapter will also focus on free cash flow generation, with this metric trending to neutral by the end of this year thanks to the contribution from the remedies process in France. securing investment rating as the overarching priority, with any excess cash generated in the future to be deployed in a manner consistent with maximizing long-term shareholder value. Linked to this, the assessment of strategic options for our current portfolio in order to crystallize value, accelerate the investment rate process, and further reduce our cost of capital. As mentioned earlier, we have an unconditional commitment to our public targets, so we are reiterating our guidance for 2023 and 2025. And finally, as a result of recent changes, we are strengthening our corporate governance with Ana Bubero appointed as non-executive chair of the board and two vacancies being filled with a representative from TCI and an independent director. As we have constantly reiterated our executive compensation structure, ensures a perfect alignment between remuneration policy and our strategic targets. And I will now hand over to our CFO, Jose Manuel Aiza, who will provide more details on the period.

Thank you, Tobias. Since you already have the full presentation, I will just provide a few additional comments on the quarter, our capital allocation priorities and financial strategy. The quarter has been an excellent commercial performance, with organic POPs growing at 6.8% compared to the same period last year. This is primarily due to the bit-to-shoot progress made in France and Poland, the strong contribution from the new entrant in Portugal, and organic revenue generated in Italy in the context of brand-sharing agreements in place. Excluding the impact from pass-throughs, revenues have increased 15% in the period and recurrent thickest flow 12%. Please bear in mind that recurrent thickest flows is temporarily affected by payment of leases and interest being concentrated during the first half of the year. Defining free cash flow as recurrent level free cash flow minus expansion capes minus P2S plus cash received from revenues. We are expecting to become free cash flow neutral in 23. Going forward, our free cash flow duration will further accelerate as we reach the end of our P2S products and this underpin our rapid deleveraging. Cellness is constantly monitoring market conditions and assessing the benefits of different instruments in order to decide the most appropriate way to tackle near-term refinance needs. As such, we are currently working to push debt maturities forward, considering a number of options. And if required, we can always use already available and drawn credit facilities to meet these financial needs. Going forward, generated cash flow will substantially exceed our debt maturities. As Tobias has already mentioned, we have made the conditional commitment to maintain adjusted leverage consistently below 7 times with the objective to become investment-grade by S&P, as well as to maintain our investment-grade status by Fitch. This commitment to investment rate should allow fairness to access a deeper market at compelling terms. And in this sense, we are already assessing strategic options for our portfolio to crystallize value and accelerate this process. And finally, just a quick reminder of our executive compensation structure that ensures a perfect alignment between remuneration and strategic targets. First, our annual bonus in 2023 will be linked to organic growth, recurrently-efficient flow, net debt VTA, consistent with our path to investment grade, as well as ESG initiatives. Our 2023-25 notary incentive plan is linked to absolute and relative PSR, free cash flow, generation, and ESG initiatives. And this is the structure that will remain in place when the CEO process is resolved. And with this, we remain now at your complete disposal to answer any question. Thank you, Tobias. Thank you, Josue Ahmed. The first question comes from Ilda Tani, from J.K. Morgan. Please go ahead.

Good broker, and we should expect an update soon. I just had a clarification, which was... Sorry, can you hear me?

Sorry, can you hear me? Now we can hear you. Can you please stop your voice, please?

Yeah, of course. Sorry about that. So I've got a few clarifications. The first one was just on the CEO process. And I guess I wanted to follow up on some of Tobias's comments from the beginning of the call. Tobias, you mentioned that there's obviously good progress. I guess I just wanted to understand a little bit better how we think about timeline. Obviously, we have the AGM in early June. So would a CEO announcement proposal come in time for the AGM agenda so that this would be part of the AGM process? And if it would, could you just remind us when the AGM agenda would come out just so we have some sense of how the timing works over the coming weeks? The second question was just on asset sales. You both mentioned good progress that is being made on this agenda as you focus on going to investment grade. I just wondered if you could comment on what sort of transactions we're talking about. Are these minority stake sales, which you've talked about before? Could this be full market exit? So what exactly is it we're talking about? And then the final one is just on your revenue growth. You mentioned strong POP growth of 7% organically this quarter, but your reported revenue growth rate is 19%. So clearly there are lots of moving parts here. I'd just love to understand what you think your organic Q1 revenue growth is, just so we have some sense of what sort of organic run rate the business is delivering. Thanks a lot.

Thank you, Akhil. I'm Tobias. You're right. Well, we do expect, and I can tell you, we'll be part of the CEO appointment, we'll be part of the AGM agenda. It's a question of a few days, and it's a commitment, and we do think that it's the right thing to execute and to finish this process. So you are completely right. The CEO appointment will be part of the AGM agenda. So let's just wait for a while, for a few days. The second question about divestments, our first priority is about minority stakes, but let me tell you why. Right. So the small countries where we are today are countries that are a bit young on our portfolio. And our sales process always takes a bit more of time. So the opportunities deserve a maturity period in order to grow. So we do believe that we have to devote a bit more of time. We have opportunities in order to consolidate the market and to continue growing in those, if I may say, small countries. because we are just, well, our priority maybe is to focus on small countries. And we do believe that selling majority stakes or full disposals, we would be losing the opportunity to consolidate and to grow. So we are open to consider minority stakes. Maybe even local investors, local means regional investors, which might be interested in order to invest in certain areas of Europe. And therefore, this is our first priority, obviously. always at the right valuation, always at the right conditions, if I may say. And why not, if at a certain point of time in the future, We do believe that we do not have opportunities to continue growing. Why not? We are not against to consider full disposals. But I think that this is a base in which we have to understand, we have to realize if there is opportunity to create value for our shareholders. If there is opportunities to continue growing, let's go ahead. If not, we are open to consider all the options. But our first priority today is about minority stakes. The third question about revenues, maybe, Alex, you can comment on it.

I can take it, Tobias. I would say that if you exclude the contribution from past loss in our revenues, as you know, those revenues, they have a mutual impact on our editor and also some other revenues. I would say that organically, we have been growing at 7% in the quarter. That is a Q123 compared to 22%. Maybe the building blocks of that 7%, maybe you can consider 3% linked to inflation slash escalators, 2.5% coming from build to shoot, and maybe one additional 1.5% coming from pure colocation. You know that secondary POPs, that organic growth is linked to a lower secondary fee compared to anchor tenants. So I would say that those are the building blocks of our pure organic growth generation in the quarter. Thanks very much. Thank you. Next question comes from Maurice Patrick from Barclays. Please go ahead.

Great. Can you hear me okay? Yes. Great. Just checking. I guess just a couple of questions from me first. I mean, the first one is I can see why you're talking down full asset disposals, but you obviously have some time now to think about the assets that you have acquired and some of them are part of larger transactions such as purchase and estate transactions. I just wondered if you, now you're looking at the assets you have and the potential monetization, if there are any that you have which you wonder if you are the right owner for it and maybe a stake sale or full sale sooner rather than later might help with the deleveraging. And there's a second question just on funds. If I'm not wrong, You've got about 300 new sites in the quarter. I think the new POPs is about 350. So clearly the focus from the operators seems to be the BTS build rather than leasing up co-locations, so tenancy ratios are broadly unchanged. Should we expect that trend to continue for the coming quarters? I mean, it feels like the M&Os have got so much BTS on their hands, they're not really focused on lease-ups. So wondering if we expect that trend to continue for the following quarters. Thank you.

Thank you, Boris. I will start with the second, and any color you can provide on us at the fossils. I think that on the coming borders, that is going to be the trend. You know that still our build-to-shoot effort in France is quite important, it's quite significant. We are deploying... sites for free anchor tenancy in parallel. And clearly also, as you can imagine, we are also making a huge commercial effort trying to increase the tenancy ratio on our existing sites. But given the size of the build-to-shoot programs that we have in place, I guess that data progress will maybe overshadow over the coming quarters the pure co-location growth. When that trend is going to reverse, as we reach the end of these build-to-shoot programs, at that moment we will be managing a significant platform in the country, in France, and then the specification needs of mobile operators in that country will be translated into pure colocation. But temporarily, it is true that in France what you should be expecting is maybe a stronger contribution from build-to-suit rather than colocation. But it's going to be a temporary situation.

Yeah, and about the investments is about value creation. So we have opportunities in order to improve our top line, but also to improve our efficiencies in those countries. And this is the reason why we... We do believe that this is not the right time to afford full disposal because we would be in a position to leave a lot of value on the table. So there are, again, opportunities not just about efficiencies. It's about opportunities on growth. And therefore, we are happy. These subsidiaries, these companies are so young in our perimeter. And, well, let's see. I mean, this is the reason why we want to continue operating the company, running the business, if I may say, because, again, it's about efficiencies, which is very important. is on track or really on track, but also we have several opportunities on the top line. So let's see if at the future these top lines are consolidating and therefore we would be in a position to think about, strategically speaking, if it makes sense a full disposal or not. But up to date on the efficiency side, we are already very happy. We are on budget or target. And again, it's a question of trying to strengthen our top line as well in those countries. Okay, thank you. Thank you.

Next question comes from Angelo Lee from Goldman Sachs. Please go ahead.

Hey, good morning, Ron. Can I just firstly just a follow up to some of the comments you made earlier? You gave some useful split of that 7% organic growth with 3% inflation, 2.5% build to suit and 1.5% co-location. The balance between build to suit and co-location is quite different to the balance between build to suit and co-location in terms of your points of presence growth. Could you just talk about the outlook for the contributions to organic revenue growth for build-to-suit and co-location? I know you talked about, it was to Maurice's question, the points of presence, outlook as co-location will take over in France from build-to-suit. But if you could talk more about the balance of revenue growth drivers between build-to-suit and co-location over the next year or two years, that would be really helpful. Second question was just on slide six. You highlight, and we've discussed this before, but a fairly meaningful drag from, in your words, mainly leases. Can you just give us a bit more colour on the drivers of this headwind and the outlook for that headwind for the full year, if there are any changes there? Thank you.

Thank you. Thank you, Andrew. I would say that in the coming quarters, you shouldn't be expecting massive changes. It is true that the speed in terms of KPIs, in terms of operating KPIs, at least in Q1, is a stronger co-location than built-to-shoot. So the picture in Q1 has been 3.6% co-location versus 3.2% built-to-shoot. But also you know that the build-to-shoot, they have anchor tenant economics. So every time that we build a new site for an anchor tenant in the context of the build-to-shoot program, they start contributing with a radically high anchor tenant fee compared to the secondary fee. And that is also why also in terms of revenues, the contribution is stronger. When you see a high contribution from secondary POVs, they also come at a lower price. So I guess that there is also some dilution from a price perspective. This quarter is 1.5%. That is just volume. So giving aside the contribution from the inflation and escalators. And I guess that going forward, you should be expecting similar trends, maybe something around 2% and talking about co-allocation, maybe something a bit higher, but nothing structurally different in the coming quarters. I mean, there is regarding leases, and I think that, as we have been discussing before, I really believe that this is an OPEC site and that it's going to work very well in the next quarters. So you can see this quarter, for instance, that even though there is growth compared to last year, this growth – It takes into account the perimeter, which is H2K, and also inflation, and you can see it's under control. So I do think that we will have a very good profile for this year regarding the leases.

Thanks, Jose Manuel. Can I just check I understood that correctly? So I think what you were saying was that the driver of the mainly leases item is Hutch 3 and inflation. So if that Hutch 3 impact washes away, then we're left just with inflation. So the drag from mainly leases reduces as a result. Is that correct?

Is that correct? Now we have a change in perimeter. Obviously, once we remove the change in perimeter, maximum inflation, but below inflation. So I would say to you up to inflation. But I think that if you take last year, you saw that the impact of inflation on our leases was very limited. And I do expect that we will continue on that trend. We're working a lot with the cash advance. The CapEx expansion is partially devoted to this line. We should have good news. Thank you. Welcome. Thank you. Next question comes from Francesca Scheidt from XAMPP BNP. Please go ahead.

Great, thanks very much. I've got two questions, please. Firstly, you called out the contribution from run-sharing agreements in Italy and Spain as drivers of revenue growth. Which run-sharing agreements are you referring to, and can you quantify these tailwinds, please? And then my second question is, can you give us an update on the Digi contract in Portugal? You've added a significant number of pops in the market. How much more is left, and do you see scope to upside this agreement? Thank you.

So, well, thank you, Francesca, for the question. In relation to the first one, basically, the range sharing that we are referring to are mainly two. One in Spain, which is the agreement that Vodafone and Orange are having for the semi-dense areas and rural areas. It's called name project is Project Jumping. And this is the revenues that we are getting basically from the POPs that we have on Orange and also Vodafone where there is the range sharing of the other counterparty. Okay. Normally, the dry sharing value, it is roughly a third on what we would be considering a typical market price, just to give you an average if you want to factorize this sort of growth that is already, let's say, quite material. That's something that we decided to add in front of you. The second one is in Italy. And in Italy, as you know, recently there has been presented an agreement between Iliad and Wintrae for all the rural areas. So that's the second important rail sharing that we are... That announcement was in January, so it's brand new. And it's also part of this rail sharing growth that you are researching. So... In relation to DG, well, I think that we've been able to seize the big material tranche of physical deployment of DG in Portugal. So... Clearly, the fact of being neutral, of having two portfolios, being able to be extremely, let's say, flexible in our money proposition to a new entrant has been, let's say, shown, let's say, a great benefit, I would say, as a second time, because we have had a similar experience in Italy when Iliad was the new entrant, right? So in that sense, there are probably still, based on what we've been announcing and DG themselves may have been explaining, a big portion of the... Deployment has already been disclosed. It's possible that there may be still additional areas of coverage that DG may be requiring. We understand that DG is also looking for a potential national roaming agreement for the rural areas, which is something which is ongoing discussions in Portugal, no? but they have decided to go with their own equipment on all dense and semi-dense areas, and we are the tower god that are supporting them.

Great, thank you.

Thank you. Next question comes from Georgios Yerotiakonou from Citi. Please go ahead.

Good morning, and thank you for taking my questions. I have two, please. The first one is around capital allocation, and I believe you discussed a bit the possibility of developing some of your assets in smaller countries, which I guess will mean M&A. There's also some key encore tenants you have in certain countries that are discussing about further disposal of assets. So I'm curious, How should we think about capital allocation once you monetize certain assets? I'm guessing there is quite a bit of M&A to be done. And also the timing, whether you feel you need to make disposals before committing to new projects or whether you could do the long term before any disposals. And then the second question is just on interest costs. And I think it's very helpful the slide you show with the phasing of interest expenses. I just wanted to clarify, based on the interest cost of around $111 million in one queue, should we extrapolate that to be around $136 million for the full year? I'm just curious whether that slide is indicative or a bit more accurate and these numbers could be taken for granted. Thank you.

Thank you, Yorio, for the question. You are going in the right direction in 320, 340, I don't know where we will land, depending on the river, because let's remind that we have a part which is open, but yes, 320, 340, that would be the right number. Let's try to go to 320, as always. And regarding your first question, if we were to dispose any kind of assets or holding in one asset, the first thing we're going to do is to get this money to pay back the debt, to reduce the level of the debt. We are not going to prioritize any kind of capital acquisition at all. So first of all, to get the investment rate and to deliver, as we have always promised to you. Once we are investment grade, listen, we will have to define two things. First of all, the remuneration to the shareholders. And second, of course, how to manage the capex growth. And this capex growth and remuneration policy must be consistent with investment grade. Look, George, as you know, CELNESS quite well. We have been investing a lot of our clients during the last years, and I'm pretty sure we will continue doing so. But at the same time, meeting these requirements, and I think we can get it done. I am very positive that CELNESS can get the right balance between these three acres, IG, remuneration, and also, of course, campus deployment. One of the key things in CAPEX deployment and what we are seeing in these first steps in this new next chapter is that there are many CAPEX programs that could come in the future but that are bittersweet driven, which means that we do not deploy all the CAPEX upfront. Okay, so we signed something today, maybe, and we deployed CapEx in a commensurated way with all the things we were saying and also the delivering profile of the company, as we said to you back in November 22.

Very clear. Thank you.

Thank you. Next question comes from Xavier Dorislo from Societe General. Please go ahead.

Hi, good morning, and thank you for taking the questions. I have a couple of questions on the disposal and your capital allocations. The first one follows from the answer to the first question today. So your preference is still for monetizing minority stakes rather than selling asset-wide an asset. But this one is instrumental for your improvements on the credit rating. If you can share with us what the credit agency thinks about you selling minority stakes vis-a-vis the issue of streaming cash into service in your debt. And following up on that one, you said that you want to have a go first to check if you can extract all the synergies available on the portfolio you acquire over time before you consider selling an asset. But can we focus on a couple of markets, especially Austria? In Austria, you bought a large package from the Hutchinson. And now you have three players, and all the three players almost have their own tower code. So you don't know where you can extract any energy in terms of growing. the tenancy ratios. So what's the strategic option available in Austria? Could you do something like you did in the Netherlands with Deutsche Telekom, if you can expand on that? And the third one is on the energy cost. energy costs have been a big weight on your clients. Now, you're trying to combine BTS in France, but none of your clients were very interested unless they can share on the potential value creation of saving on ground leases. If you find any more interest more recently, consider that the increase in energy basically makes it more difficult for them to run single antenna and a single tower. If you can expand on that. Thank you.

Thank you, Octavio. Well, maybe I was just... There is some big question here. Octavio, one of the key things we have to look for is that there is no subordination in the data at the whole call level. This is key. So we cannot, for instance, dispose of a company, let's call it a big country in the group, that casts upstream a lot of money to the Zendesk whole core. Because in this case, we would be running the risk of jeopardizing or subordinating the debt at the level of Zendesk Telecom SA. However, having said that, it is possible to sell a minority shareholding in one of these big companies of the group and do not create subordination. So this is one criteria that we have to keep in mind, as we have said before. Having said that, if we were to do other kinds of transactions in smaller countries, and we sell a minority stake, and as Tobias is saying, I'm pretty sure we will not subordinate. And maybe in the future, if we are not able to create more value, we could dispose the whole asset in the long term. So minority stake does not mean that Cernes is against selling, disposing all the assets in the future. I think it's a step. In a good direction, which is investment rate, let's see how much we have to do in that way.

Yeah, but in the right conditions for the right valuation, we do not foresee additional value creation. So let's see is a path, no? It's a journey in a way. So you were referring about Austria or other opportunities. Well, you are right. Three telecom operators, three tower costs. Let's see what happens. But, well, in any case, we are strengthening as much as possible our efficiency. It's about how to deliver the services, how to operate. And don't forget that Austria means Hutchinson. So we are delivering 100% of the passive infrastructures to Hutchinson in Europe. And therefore, Austria is not a standalone basis country, if I may say. It's part of the portfolio of assets of our largest customer as well. We have to factorize different dimensions, as José Manuel said, about this coordination of the debt and other parameters that we have to consider. So open to improve this kind of efficiencies and synergies in all of the countries, but, well, assessing properly in every country, every opportunity.

And in relation to the last one, Octavio, I think it's a very interesting question. So the intention to share built-to-suit or to avoid building a built-to-suit because we have a second portfolio in one country and we avoid that construction, of course, this is one of our top priorities today. of our management in the countries, in those countries where we have two or three anchors, and we are working heavily on that. But basically what we are saving here is not energy, but one ground lease, which is not a minor issue. However, where there is an important saving of energy for the operators is not because they may be having a mutualization of passive equipment in one tower, but actively. when two operators are sharing one passive infrastructure, but still they have two equipments, the energy is two times. However, if they share the equipment, the savings on energy is not 50%, but could be around 30%. So that's why we believe that most likely the next wave, and we are already perceiving that by all those run-sharing agreements or outsourcing of the active equipment, is going to be in order to save energy, to share more the active equipment, but not triggered by the passive motorization. So it's probably the next wave that we'll be seeing among MNOs. Thanks.

Thank you so much. Next question comes from Emmett Kelly from Ardent Study. Please go ahead.

Yes, thank you very much, Juan, and good morning, everybody. Just two questions from my side as well, please. First question is on the UK. So it's now, I think, five months since you took control of the asset. Can you maybe just say a few words about your early experience of the asset and maybe any updates you might have on the electronics communication code in the UK and how that could maybe drive progress? and some cost savings in the future. And the second question is a little bit of a follow-up from what Otavio was asking. It's on build to suit. You've now been building new towers for many years. I think you started in France. Can you maybe just say a few words about the success you're having on adding second tenants on those newly built sites over the last few years? Are you beginning to see more demand for adding tenants on newly constructed sites? Thank you.

So let me start by the last one, Emmet. Well, the advantage of having all those massive programs, I think it's twofold. First of one, understanding where the tower has to be built. And yes, it is true that we are building towers with two tenants from inception. Okay. And this is a trend that it's increasing. It's not massive, of course, but it's the advantage of having those projects in those countries where we have two anchors or more. The second element on this build to shoot is avoiding to build a tower. And this is because we have another program from another client that we can save building one tower instead of building two. Or we have a legacy. And this is the type of projects that, well, I think we've been discussing on the past, it takes some time in order to consolidate our positions and the builders of programs, etc. And this is the type of projects that... We expect to share with you in the coming months in relation to that, that we are actually saving ground leases because of the fact that we do not actually build, but we co-locate a new tenant on one of the existing towers. But having to preserve the economical equation that it was at the very beginning, at inception of the B2C agreement with the client. So as you can imagine, it's not an easy discussion, but we are very well advanced on this type of discussions. So I think both elements are going in the positive way. Yes, on the UK. Well, certainly on the UK, the closing is very, very recent. And you know the structure, which is this economic benefit agreement. We are just trying to understand, let's say, how the implementation of this difficult scheme is going to happen. The contract itself allows for adjustment mechanisms. And we are on the very initial phases of that process that we will keep you posted on that. Secondly, on the code, well, the code is advancing on this agreement that I was just referring to. The code benefits are already implemented in the agreement. as we expect that NBNL performs also the implementation of the code in the same way as we do outside of the perimeter of the EBA. And it is a very valid way to create value. Honestly, it's the best one in all Europe in terms of being in a position for the telecom sector infrastructure operators that we own an electronic apparatus, as this is called in the code itself, in order to, let's say, have a reasonable pricing on the RAM lists. So it's progressing very, very well in that sense. Super.

Thank you very much.

Next question comes from Luigi Viderba from HSBC. Please go ahead.

Yes, good morning, everybody, and thanks for taking my question. Before asking my question, just a word of thank you to Tobias. I presume it's your last call as CEO of Stelnex, so thanks for everything we've learned over the years from you. My question is about regulation, and it's about the European Commission Gigabit Infrastructure Act. Now, my understanding is that one significant change coming from the proposal from the European Commission is the inclusion of tower codes in the scope of the regulation. So potentially, a network operator could ask the TowerCo to grant access to the infrastructure on fair and reasonable terms and conditions, including prices. And the risk is that this may eventually lead to regulated prices in case of disagreements or similar issues. So my question is, well, how tangible you see this risk and what are you doing as an operator or as an industry to avoid regulation on prices? Thank you.

Thank you, Luigi, and thank you for your kind words. It's also my pleasure. Let's talk about this GIA, GigaWide Infrastructure Act. When we talk about regulation, we are talking about access, which means a wholesale regulation, not a retail price regulation, which is very important. So we have to, if we are included in this GIA Act, It means that we have to provide access, but in the other way around, we can ask access at the wholesale price, at reasonable prices, which nothing to be with the final price to the MNO. This is very important because for the telecom infrastructure companies, Well, you know that it depends on the country, but at the European level would be very, very useful in order to provide reasonable access to public assets or to ask even to other tower costs wholesale access. But at the end of the day, the key question is who is managing who, let me say, if I may, owns the customer. So the regulation is trying also to avoid to build additional towers, duplicating for free without a writing contract. with an MNO and then trying to avoid the duplication of towers in our European countries. So I think that overall it's helping. This is, I think, a very soft regulation because we are having the same regulation in the broadcasting. We have a lot of experience dealing with this kind of regulation and it's helping in order, again, to provide access at reasonable prices, but price means wholesale access to other telecom infrastructure companies, nothing to do with the final price. And second one, also to provide, let me say, or to facilitate the five-year rollout at reasonable prices of the groundless contracts, you know what I mean. So, Again, I think that the parcels, the rooftops, the growlies are also part of our core assets, are part of our sites. So all in all, it makes sense. Avoiding duplications is a benefit for all of us. It's a benefit in terms of ESG. It's a benefit in terms of municipalities, in terms of condominiums. in terms of municipalities, but also in terms to reuse the existing infrastructures as much as possible in transparent conditions and reasonable prices. This is the summary in terms of the GIA. Just to tell you that I am running the discussions thanks to the chairmanship of the European Wireless Infrastructure Association, in which Celnyx is the chairman and, well, myself am the chairman, and therefore I can tell you that I am leading these discussions with the European regulator.

Thank you very much. That's very helpful. Thanks.

Thank you, Luigi. And the last question comes from Fernando Abril Martorell from Alantra. Please go ahead.

Hello. Thank you very much for the presentation. I have one quick question. It's with regards to the operating leverage. So, and correct me if I'm wrong, but we exclude the energy pass-throughs. Revenues and EBITDA have grown by roughly 15% both. So no operating leverage, and based on the sales breakdown that you've provided, which is, by the way, very helpful, there was a 1.5 collocation growth rate, and inflation was 3%, and you've mentioned that OPEX is growing below inflation. So I don't know what are the moving parts from this no operating leverage in this Q1, and what do you expect operating leverage to be in the next few quarters? Thank you.

Thank you. Thank you, Fernando, for your question. And yeah, you are right in your estimation, but please take into account the footnote number two of page number five that says that when we are talking as always, and this has been always the criteria, that we take into account leases in this estimation. Okay, so a lease represents a big part of the total somehow OPEX-based when we do this calculation of CPI impact. Having said that, let me tell you that you are right, that this first quarter we have had the same growth, more or less, in terms of revenues at OPEX. There has been a change in the perimeter. We do expect that during the next quarters we will change this trend. I'm pretty sure that at the end of the year, the EBITDA margin will be more than full year 2022 EBITDA margin. So it's a question of integration of the company, as you get in this case, and now step by step to be able to obtain, again, the operating leverage that Thelness has always shown. So it's a process of time.

Okay.

Thank you very much. Thank you. Thank you so much. And with this, we have reached the end of the session. And thank you so much for your attention and your time today.

I would like to thank you all. It's my last result presentation. It has been a pleasure, but I do believe that we will keep in contact in life because you never know. And I love this market, this industry, and I love this company. So thank you all. Thank you all because it has been a pleasure for me. I was learning a lot from you. And I wish you all the very best in your profession and personal life. All my best wishes. Thank you so much. Thank you, Tobias.