Calnex Solutions plc

Okay, good morning, everyone. My name is Maria Carapato. I'm the head of investor relations. And I'd like to thank you again for joining us for our third quarter 25 conference call. I'm joined by our CEO, Marco Pazuano, and our CFO, Raimond Ries, who will go through the key highlights of our results. And then we'll open the line to take your questions. In the interests of time and clarity, I'd ask that you focus on more strategic questions for the management team and avoid repeating topics that have already been explained in previous questions. On more detailed numerical issues, I encourage you to place them to the IR team to make this call as relevant as possible for all participants. If you wish to ask a question, please press the button on your screen to raise your hand. and we will be limiting questions to two per participant, and as usual, any follow-up questions can be addressed after the call to the IR team. So, without further ado, over to you, Michael.

Thank you. It's a pleasure to be with you again this quarter to share how we continue to execute our strategy with discipline, consistency, and a sharp focus on long-term value creation. While we acknowledge recent concerns around potential impacts from M&O consolidation that have affected our share price, I'd like to begin by focusing on what truly matters, the fundamentals. Because ultimately, it's the strength of our business and our ability to deliver sustainable performance that defines Sellnext's value for both shareholders and stakeholders. We proposed another period of strong operating and financial results, enabling us to reaffirm all our public targets and demonstrate the resilience of our business model. The first nine months of the year, we delivered a solid growth across all major financial metrics on an organic performer basis. Revenues increased by 5.7%, adjusted EBITDA rose 6.9%, EBITDA grew 7.5%. These results reinforce our confidence in the business and allow us to strengthen our commitment to shareholder returns. We began returning capital ahead of schedule, with 800 million delivered in 2025 via share buybacks. Today, we're committing to a total of 1 billion in shareholder returns, through the end of 2026, representing a 5.4% yield at current share prices. So now, looking at the highlights of our results for the period. The operational demand remains robust, with continued momentum in BTS and co-location. POPs grew by 4.1%, underscoring our critical role in enabling digital connectivity across all our portfolio, including markets that have recently undergone consolidation. Our operational efficiency and land acquisition programs are delivering tangible results, driving a 150 basis points improvement in EBITDA after lease margin, which expanded to 60.8% up from 59.3% a year ago. we remain confident in our ability to unlock further efficiency and enhance operating leverage. Recurring level free cash flow grew 9.5% year-to-date, reinforcing a consistent quarterly trend. Over the past 10 quarters, recurring level free cash flow has delivered a character of 2.1%, and on a per share basis, a key metric for us, recurring level free cash flow has achieved a character of 2.5%. reinforcing our commitment to sustained shareholder value creation. Free cash flow has turned positive and is accelerating along a clear upward trajectory, supported by lower capital intensity, positioning us firmly to meet our 2025 and 2027 targets which we fully reiterate today. As communicated to the market, We recently signed a put option agreement to sell our French data center business for 391 million, reinforcing our focus on core telecom infrastructure and unlocking value through disciplined asset rotation. A note on our shareholder reduction program underway. Following the 800 million buyback executed earlier this year, this will drive clear improvement in per share metrics and continue enhancing shareholder value. On the balance sheet, leverage is down from 6.6 times to 6.4 times and we remain committed to our 5 to 6 times target range. We are investment great and fully committed to maintain that status. I would also like to share positive news on our credit rating. Just days ago, Fitch reaffirmed our BBB- rating and raised our leverage threshold from 7.0 to 7.3 times. This adjustment gives us greater financial headroom. We view it as a further independent validation of our strong business outlook and financial discipline. In summary, We are delivering continued operational growth, increasing operating leverage through efficiency, reducing capital intensity and accelerating pre-cash flow generation, positioning ourselves to capture long-term value. The outlook is positive, and as a result, we are accelerating shoulder returns whilst reinforcing strategic focus. Let's now take a closer look at the details behind our results. In slide five, we illustrate the strength of our operational leverage and how it translates into profitability and cash flow growth. Over the first nine months, we've delivered consistent progress across all key metrics, underscoring the resilience of our model. Organic revenue growth was solid, and combined with efficiency initiatives, we successfully converted that momentum into profitability. Both EBITDA and NBDA after lease advanced on strong rates, reflecting not only scale but also discipline cost in lease management. Beyond profitability, we further reinforced cash generation, and when we look at the recurring leverage cash flow per share, the improvement is even more pronounced, highlighting our commitment to creating sustainable shareholder value. In short, These results confirm that our growth is efficient, margins are expanding, and our ability to generate recurring cash is stronger than ever. Moving to slide 6. We are happy to announce 1 billion shareholder remuneration for 2026, which will be split in 500 million in dividends, as previously announced at our capital market day, which will grow at an annual rate of 7.5% through 2030. Payments will be made in two equal installments of 250 million in January and July. 500 million will be returned via share buybacks. This includes 300 million already earmarked for shareholder remuneration, plus an additional 200 million enabled by the sale of our French data center. The buyback program will be executed in the regulated market and will run through the end of 2026. Remaining proceeds will be used to reduce leverage, reinforcing our disciplined approach to capital allocation. These reinforced commitment to shareholder returns reflect our deep conviction in the fundamental value of our company and our focus on delivering long-term value. And yes, we should expect more on that front. Financial outlook is reiterated. Given the strength of our results and continued execution, we are reaffirming our guidance for 2025 and 2027, underscoring our confidence in delivering our business outlook and on our commitments to the market. I will now hand over to Raimon to share some more key data on our operational and financial performance on the quarter. Raimon, to you, please.

Thank you, Markov. Good morning, everyone. Let's move to slide 9 and back into the results. We have in front of us another quarter of a strong performance. As highlighted earlier by Marco, revenue grew organically by 5.7%, demonstrating solid momentum and the resilience of our business model. Adjusted EBITDA increased by 6.9%, while EBITDA after lease rose by 7.5%, reflecting a strong operational leverage. Looking at cash generation, recurrent level free cash flow reached 1.3 billion euros, keeping us firmly on track to meet our full year targets. Free cash flow came in at 187 million euros, reinforcing our trajectory of accelerated cash generation supported by lower capex intensity, mainly lower bill-to-sale. Turning to operational metrics, execution remains strong. We added almost 3,000 new build-to-shoot POPs, expanding our footprint to meet rising demand. In parallel, we delivered about 2,000 new co-locations, underscoring our strategy of network densification and quality enhancement for our customers. Our customer ratio improved to 160, up from 158 at the year of N24, marking continued progress in tenancy. We continue to execute effectively on our list management programs. As committed in the Capital Markets Day, we are increasing the focus on land initiatives. As a result, this year, land and efficiency capex totaled 195 million euros compared to 135 million euros last year, more than 40% increase. All our metrics show solid performance quarter after quarter. As you can see in slide 10, we continue to deliver a strong year-on-year organic growth. Such growth is driven by several key factors. CPI and escalators on the paid revenues. Collocation on existing sites. And the rollout of new builders of programs, particularly in France and Poland. To provide a clearer view of our performance during the period, we have excluded the impact from Ireland and Austria. On this slide, we present our organic revenue bridge on a pro forma basis. Excluding both countries, organic pro forma growth at the consolidated level was 5.7%, while our revenues grew by 5.1%, underscoring the strength of our corporations. Let's look at the data on the remaining business lines on the next slide. Starting with fiber connectivity and housing services, we delivered a strong growth of over 20% year-on-year, driven mainly by the continued flow of the next fiber project in France. Thus, the small sales and run-as-a-service growth was 0.8%, but when adjusting for the discontinuation of operational maintenance contracts in Spain, the underlying trend was positive at 6.2%. Please remember that we decided to discontinue O&M activities due to its low profitability. Project deployment in DAS tends to be quite lumpy, depending on the pipeline execution facing, but also impacted by trading activity that is less recurrent. Finally, broadcasting delivers stable growth of 1.5%, supported by ongoing renegotiation of contracts. Overall, these results confirm the robustness of our diversified portfolio, with each business line contributing to consistent growth. Moving to slide 12, this slide reflects the continued positive evolution of our POPS growth across all geographies, driven by a combination of co-location and built-to-sub programs. What stands out is the consistency of this trend. even in markets that have undergone consolidation processes. Take Spain and the UK, for example. Both have experienced consolidation among M&Os, which could have created headwinds. Yet, we successfully mitigated these impacts and maintained robust growth, proving the resilience of our model, the strength of our customer relationships and our contracts. Looking at the consolidated view in the top right, The upward trajectory is clear. We have a large and growing base of POPs across Europe, reinforcing our position as the market leader. This scale not only supports current demand, but also gives us a strong platform to capture future opportunities. In the bottom right, we show the quarter POPs growth by country and providing the split between co-location and B2C program. It is worth noting that in the third quarter we had an important contribution of Ransharing Pops from Digi in Spain. Moving to the next slide, we provide the details on how our operational efficiency and industrial focus are driving tangible results. It all starts with the key levels, process optimization and standardization. integrated maintenance and vendor management, centralized knowledge and performance excellence, and targeted land acquisition and efficiency actions. These initiatives enable automation and scalability, creating standardized and data-driven operations across all countries. We have achieved sustained reductions in maintenance costs to improve operations and efficiencies. Full digital adoption has allowed us to standardize workflows and enable real-time supervision, while centralized models have reduced complexity and improved resource utilization. The impact of these actions can be clearly seen on the right side of the slide on a per-hour basis. Staff costs are down 1.7%. Repair and maintenance costs have decreased by 3.7%. SG&A is down 5.5%. And in leases, we have offset the impact of CPI as a result of the successful outcomes of our lease management and CAPEX programs. Altogether, these efficiencies have contributed 180 basis points to a bid-after-lease margin, reinforcing the scalability and cost effectiveness of our operating model. In short, this is a strong example of how industrial discipline translates into measurable financial benefits and positions us for sustainable growth. Moving to slide 14, the first part of the slide explains a reported bridge from a bit after lease to free cash flow, showing all the components that shape our recurrent lever free cash flow and free cash flow. This strong recurrent lever free cash flow generation is the result of our solid operational performance and efficient tax and capital structure. Finally, our free cash flow was positive at 187 million euros, supported by the strength of recurrent lever free cash flow and lower capital intensity both on both expansion and build-to-suit CAPEX. On the bottom chart, we break down the evolution of Proforma CAPEX. First, overall expansion capex decreased by 1.7%, reflecting disciplined investment without compromising growth. Second, looking at the mix of expansion capex, we see a balanced allocation. Towers remain the largest share, while efficiency capex initiatives have increased, reinforcing our focus on optimizing returns. Finally, build-to-shoot capex decreased by 4.2%, reflecting progress to complete the outstanding programs supporting the free cash flow acceleration path. This disciplined deployment is driving efficiency and improving free cash flow conversion, which is a cornerstone of our strategy. On slide 15, we see that cash flow generation is accelerating, supported, as we mentioned, by lower capital intensity. This improvement reflects disciplined investment and a clear focus on efficiency. It also adjusts for the impact of pro-emitives. Equally important, our share-buy-back program is enhancing per share metrics as Marco mentioned. Let me remind you that during the year 25 we have executed 800 million euros of share-buy-backs. The recurrent level of free cash flow per share has grown significantly, 13.2%. showing that we are not only generating cash, but also returning value to shareholders in a meaningful way. Together, these elements confirm that our capital allocation strategy is working. We are investing wisely, generating more cash and creating sustainable value per share. Before I give the floor back to Marco, let's now take a look at our debt maturity profile on slide 16. All 2025 maturities have been either repaid or refinanced. As a result, there are no remaining maturities left in the year while we still remain with a strong cash position. It is worth noting that 78% of our debt is fixed rate. Our average cost of debt is 2.1% with an average maturity of 4.4 years. Our leverage ratio has improved from 6.6 to 6.4, and net financial debt decreased, despite the execution of the share buyback, by circa 500 million euros, reflecting disciplined capital management. Now, I'll give the floor to Marco to continue with the presentation. Thank you.

Thank you, Raymond. Well, in this moment, it is mandatory to tackle the topic of the M&O consolidation, so let's do it. Let's move to slide 18. first i remain confident in our future demand for data is increasing networks are congested and we provide a mission critical service to operators the need for densification driven by the rollout of 5g becoming a demand from artificial intelligence that the early pilot test of 6g are just some indications of what's ahead of us we also benefit from positive optionality stemming from regulatory requirements as we saw in the case of the UK merger between Vodafone and three with mandatory investment requirements and the continued rising in data consumption this is only going one way and this way is up so the elephant in the room is M&O consolidation this might be new to some of you it's not definitely new to us We successfully pre-empted contract renegotiation with Telefónica in 2023, extended to 2052. We recently announced two contract extensions with Mass Orange 2048, Vodafone 3 2055. More duration is more predictability, is more visibility. Those are tangible results. They didn't happen by luck. It's a result of strategic planning by Celnex. Overall, I'm not over-concerned about M&O consolidation. Let me share with you a few reasons why our business is resilient in the face of consolidation and why we see it as a strategic opportunity. The key reason why M&O merged is for market repair, not for site decommissioning. This push for consolidation among European mobile network operators is driven by long-standing market challenges. Declining revenues, low margins, limited room for further efficiency gains, high investment needs, low return on capital. Consolidation can help MNO to repair their markets, eliminate inefficiency, unlock potential for improvements and expansion in their margins. Remedies have generated new entrants and remedy taker. Non-opposition by regulator comes this way with behavioral remedies demanding continued improvement in network coverage, capacity and quality. These drive growth in the market and for the tower cost in the medium term. At the same time, spectrum renewals are increasingly being tied to CapEx obligation, signaling again a meaningful shift in regulatory priority towards investment-driven outcomes. We are confident that all those opportunities will offset the potential challenges related with potential churn or growth reduction in the immediate aftermath. Our all-or-nothing contracts offer long-term visibility and stability, but equally important is the strategic alignment that defines our trusted relationship with clients. MNO will not walk away from this agreement, not only due to the complexity and the cost of replacing a partner deeply embedded in their network evolution, but also because of the value we co-create and the absence of a viable alternative to replicate such a significant portion of the infrastructure. MNO recognize the need to invest in network quality and coverage. In page 19, we present you a selection of some of the many public statements made by the MNO. Let's now move to slide 20 to tackle the M&O consolidation in some of our key markets. In past consolidation cases, we have successfully negotiated win-win outcomes. We have consistently demonstrated the strength and enforceability of our contracts across all consolidation scenarios. Each case has affirmed our legal standing and led to successful negotiation that not only reinforced but extended our contractual terms, underscoring the respect MNO have for their validity and their strategic importance. So, we have strong legal protection. Our long-dated all-or-nothing clauses and our consent is needed due to change of control clauses. We have a direct seat at the negotiation table. This is what has allowed us to extend contracts in recent years. We have captured incremental business both from consolidating operators and from broader market driven growth. Post consolidation, our M&O clients are stronger and better clients and willing to improve their networks to better compete on network quality and services. Investments are needed and Selenium owns the key infrastructure for that. These outcomes have preserved the net present value of our assets while contributing to a healthier, more investment-ready M&O ecosystem. While early-year cash flow may be slightly lower due to flexibility we provide to M&Os in order to streamline inefficiencies, they rebound over time and ultimately surpass previous levels. And that's before accounting for additional investment in mobile networks. We have positive optionality there. Spain and UK are proven success stories. We've already demonstrated our ability to thrive through consolidation. preserved NPV of our countries, extended MSA maturities, Spain to 2048, UK to 2055, strengthened client partnership and expanded business code. For example, we recently announced new deployments with Vodafone 3 in UK, part of their 11 billion investment plan, to be one of Europe's most advanced standalone 5G networks, aiming to reach 99.95% of the population by 2034. Other MNOs will likely respond with further investment in order to remain competitive. In Spain, market momentum continues to build. Digi has constructed an additional 3,000 POPs to run sharing on Telefónica network, and Telefónica itself has expanded its footprint with us by adding 110 new physical POPs. I want to move to France. Slide 21. In France, we have around 12,000 POPs from SFR, with over 80% under all-or-nothing contracts and unknown churn rates below 1%. The earliest MSA renewal is in 2039, and secondary tenants' contracts begin to expire only in 2034. With a geographic reference, in rural areas, 60% of our POPs are in rural cross-zone areas, with full run sharing between SFR and WIG, so already very efficient. From the terms announced in the MNO's first offer, as expected, We will retain rural sites where SFR is an anchor tenant, ensuring continuity. These sites were part of our original portfolio and generates no incremental run sharing fees, so financial impact is simply non-existent. In dense area, less than 10% of the POPs are non-anchor, meaning almost all are protected by long-term conflicts. Our technical analysis shows that these sites are critical not only for SFR but for Buick, Illion and Orange, supporting ongoing densification efforts even amid consolidation uncertainty. From both a legal and a technical standpoint, we see minimal risk of churn under any consolidation scenario. Any changes to our contracts requires our consent, positioning us as a key stakeholder in the negotiation. We expect to participate meaningfully in the value created, capturing synergies from the emergence of stronger, more resilient NNOs and benefiting from the substantial capital commitments that regulators will require as a condition for their merger approvals. It's also important to know This will be a long process. M&O must first agree on terms, then navigate due diligence, they have to pass through regulatory reviews, stakeholder approvals throughout maintaining service quality, which will be paramount. And we are essential to that continuity. Recent rumors in Italy. So, another market. Our approach remains the same, remains consistent. We are confident we can preserve the NPV of our contract with credible upside potential for the reasons mentioned above, data consumption, network capacity, congestion, etc. But there are a few points that are very relevant on the potential of M&O consolidation in Italy as a market. Italy has stringent emission restrictions, making our existing sites extremely valuable. A collocation on our main competitor is limited, given its high starting collocation ratio. Our sites are needed. The risk on our operation in Italy is low. Possibly you saw this morning the last announcement on additional collocation agreements and extension with Vodafone Fastbed for further 12 years. So, our thesis is demonstrated once again. Now, time to wrap up. Let me leave with a few takeaways. We continue delivering strong operating and financial performance across the board, and we remain firmly on track to achieve all our targets. Our focus on industrial excellence continues to pay off, driving increasing operating leverage and accelerating both in everyday after-lease and pre-cash flow metrics. We've also seen clear validation of our strategic partnership with customers, and of the strength of our MSA contracts, which continue to demonstrate resilience amid evolving market dynamics. Importantly, Celnex remains a non-avoidable counterparty in any consolidation scenario. Our consent is required across the board, reinforcing our central role in shaping outcomes. We view consolidation as an opportunity, a chance to deepen strategic alignments with our clients and to benefit from the growing need for diversification and for its improvement. Finally, we have reiterated all our public targets. We remain fully on track for our diminutive commitment starting in January 26. Thank you. Let's move on to Q&A. Maria, the floor is yours.

Okay, thank you, Michael. So we'll move over to the second question. It comes from Andrew Lee at Goldman Sachs. Operator, can you see if the line is open?

Yes, the line is open.

Okay, so let's go to the next question. So the first question comes from Roshan Ranjit at Deutsche Bank.

Great afternoon, everyone. I've got two questions, please. On the buyback, can I just get a kind of understanding of how you think about the mix when you came up with the kind of the 1 billion? Obviously, in the last year, you... put this ordinary dividend for about 500 million. You kind of used the proceeds from the data center sale to top up the buyback. But was there a consideration to maybe start the ordinary dividend from a higher base? And just coupled with that, can I just check that you are still guiding to the kind of 10 billion cumulative cash distribution by 2030? And secondly, on the credit rating change, I think that the Fitch decision came earlier than what you had perhaps thought. What are the implications of that higher headroom? Clearly, you're a whole turn below the upper ceiling there. So how should we think about the benefits of that? Is it more of a cost of funding when we come up for the refis? Anything you can say around that would be very helpful. Thank you.

Thank you very much, Sean. On the buyback, first of all, we committed to 500 million dividend and we stayed to the 500 million dividend. We work our talks. In this moment, one year ago, we said that the minimum would have been 800 million. And I think that we all agree that with the share price at this level, just for being consistent, we made a share buyback at 32. With the share price at 27, we do a share buyback. It's consistency. So the idea is we want to have the dividend strongly linked to the free cash flow that we are generating. Further cash that is made available is going to be allocated depending on the market moment to share back extraordinary dividends. I think that we all agree that at this level the best decision was this. On credit rating, having flexibility is always good. So we have, first of all, what is important is that Fitch after S&P has confirmed the validity of our investment thesis. If you take the report, issued by Fitch, you see that how they evaluate the risks, even the risks of M&L consolidation, they are considered moderate risks. So this is very important. For us it's important to have flexibility, In this moment, in this very moment, the board decided that the flexibility is capped for the rest of the year. But, you know, having the flexibility means that in any moment we can use the flexibility.

Okay, thank you. We'll move on to the following questions. It comes from Rohit Modi at Citi.

Thank you for taking my questions. Just one follow-up on the leverage question, that is, given your leverage target 5 to 6, given you have a higher threshold, firstly on the timing, I think your earlier target was 25, 26, but with this shareholder return, clearly you will be above 6 times in 26. Please correct me if I'm wrong. So are you moving it a bit further when you say five to six leverage target range? And then the flexibility around, I'm just trying to understand, will there be flexibility in terms of using the flexibility on investing into organic growth, like operational efficiency, we have been generating quite decent return on those investments. So what kind of opportunities do you see there? And second question is just on any of the disposals that you have in pipeline or that you think, you know, like the data centers that, you know, that could come up. your future thanks so much sorry I tried to answer probably the first question I think was was clear the second question wasn't clear sorry apologies it is only one of the disposals any other disposals that that could be in pipeline apart from the french data centers or that you think that you consider could be on strategic and want to dispose

So the leverage question was in terms of the timing of the target?

The path to the leverage has been very consistent. Now, the moment we decided to accelerate our shareholder remuneration this year and the increase of the shareholder remuneration for 2026, is clearly going hand in hand, not with the change of our target. Our target remains 5 to 6, but we consider that even having in mind this flexibility that we were mentioning before, we aim to be between 2026 and 2027 for going to 6.0 or below 6. So our target remains the same. We have a prudent view on our capital structure. We want to be between five and six. And as I said before, having some flexibility give us, not flexibility in the final goal, but flexibility in the time to go, which in any case would remain fairly consistent in our view. On disposals, you know, Our key principle is that we sell an asset when the value can be maximized. So in this moment, we don't need to sell assets to maintain our commitments or to deliver what we promised to the market. So having the value maximized is what we did in Ireland, is what we did in Australia, Nordics, and even recently the French data center. If you take Y, we took a little bit longer to sell the first to the center, simply because we decided to maximize the result of the disposals. So, discussions in one of the specific markets are still ongoing, but we are not under pressure, we have no more commitments. So, if there will be something, if there is something more, we will let you know. We stay absolutely disciplined and we only sell when value can be maximized.

Okay, so moving to the next question. From Otavio at Bernstein.

Hi, good morning and thanks for taking the questions. The first question is actually on the business as it is at the moment. Looking at the results, we have seen reducing contributions from co-locations, and that is a big contrast with the improvement in the POPs. So the question is, It's just the fact that the POPs came towards the end of the quarter, so therefore we should expect better contribution next quarter, or just the mix, because it was run sharing, therefore the economics are not as good, and therefore that's the reasons why collocation's contribution to revenues has not been great. And this tied up to the questions on M&A. This is not the first time we talk extensively about all the protections that you have on the contracts towards consolidations, and the fact that you do work in partnership with the MNO. It's just not that the fact you're protected by the contract is just because the MNO will need you. And my question is, if the MNO talks to one another, and therefore the negotiation has been long in the making, It's the fact that probably they've been halting or opposing their co-locations plans, and that's impacting your current performance of revenues. Thank you.

Thank you, Fabio. Well, your first question, the answer is both the topics that you mentioned. So the growth in the POPs, as we said, is coming in a certain quantity from demand sharing in Spain. And as you know, let's make a rule of thumb. If an MSA counts one, the price of the second tenant is half of it, and the price of a run sharing is a fourth or a fifth of what is an MSA anchor fee. So the answer is yes, there is both. There is a portion that is due to timing and a portion that is due to price mix. On M&A. Well, first of all, thank you because you clarified spot on that the protection is coming on one side from the legal, but on the other side from the intimacy we have with our clients. I was just talking a few days ago with our clients in France, and they were telling me The process, if we are able to make it, will last four to five years. A couple of years between agreeing on the price and getting the approval, and then another couple of years for making the asset allocation among the bidders. So do you think that we can wait five years before making another collocation or another? The answer is no. The life goes on because the clients are there and the competition is there and the quality required is there and the traffic growth is there. So the answer is I think that we tend to overestimate that the world stops because there are talks about people talking about consolidation and so the entire planet stops. uh those processes take care and uh and therefore the fact that we work with them is super important but then of course we work together uh we are saying to us afar let's slow down uh in urban areas but let's continue in the rural areas because in the rural areas everybody knows that the day of tomorrow it will go to a week please run channel with that so It's a day-by-day work. We work with them every day. We work with them constantly. It's very much on the intimacy.

Okay, thank you, Otario. And now moving on to Halima from Goldman Sachs.

Yes, thank you for taking my questions. I have two, please. Firstly, on the decision to stick to the minimum 500 million euro dividend, I just wondered if you could take us through the thinking around this and how you look at allocating capital between the dividend and a buyback. And then secondly, could you share any updates on your refinancing plans past 2025? Thank you.

Yes. Okay. I take the dividend and I leave the refinancing to Raymond. Well, sorry, I say again what I said before. We committed to 500 million growing by 7.5% starting from 2026. But we decided that 2026 could be from January 1st to December 31. And so we said, okay, let's start in January because our cash flow is very much okay. It's slightly better than our original expectations. So the dividends are there. And then we have, as a minimum, another $300 million, as a minimum. And how do we think about it? Well, with the share price at $6.27, it's very easy to think about, because the attractiveness of a share buyback in terms of long-term value creation for the shareholder is there. So there is nothing to invent. I hope that it will not take so long to create me the doubt of if it is still convenient or if we have to sink it to extraordinary dividends. As of today, the decision is very easy.

Raymond, on refinancing. So, when looking at refinancing, I would say various things. We have closed the quarter with 1.4 billion of cash available with no maturities in the year 25 and 1.7 of maturities in the year 26. On top of the cash, we have the undrawn facilities, 3.3 billion. So in total, our liquidity is 4.8 that covers the maturities of 26 and 27. So we have a good situation from a liquidity perspective. we have the first maturity coming uh april 26 if i'm not wrong and our idea is to go to the markets probably the beginning of next year we're looking and we're actively looking opportunities to see if it makes sense to go out this year or next year and we will decide depending on market situation But so far what we're trying to look at is to gain as much duration as possible so that our debt correlates more also to the income that we have from our contracts. So we're looking at maturities from 7 to 10 years. That makes, from a cost perspective but duration perspective, more sense than the situation we have today so that we are able to increase the average maturity of 4.4 a bit longer.

Okay, thanks. So now moving on to James Ratzer from New Street Research.

Yes, good morning, Mark. I thank you for taking the question. Two, please. So the first one on organic growth, what I'm interested about is when I look at your BTS programs, you have a few that have just finished. You've got a few that are coming up to expire, so kind of Iliad in Italy and France. You've maybe got Sunrise in Switzerland, a couple in Portugal. What are you seeing from those MNOs in terms of their demand for tenancy growth as the formal BTS programs complete? Do you see kind of ongoing demand beyond the completion of those BTS programs? And then secondly, just interested in the performance you had in Italy, this quarter uh it looks like in particular kind of tower revenue growth you book there was was extremely strong was wondering if you can comment on that anymore and you know is that a kind of sustainable level of growth going forward thank you yes i take the first and i leave to ramon the second um well the the the literature programs uh that we are completing now are the results it's a sort of a

forward execution of the original M&A. When we bought the portfolio, there was existing towers and new towers. So going forward, is it going to be, there is going to be more growth. The answer is yes. This growth is going to be all via collocation. No, it's not going to be all via collocation, but I think that the quantity of new towers that is going to be built in the future is going to be materially lower than what we built in the past. Operators realize that if they want to be efficient, one way to be efficient is to stop building towers and pay every time an anchor fee. So paying a second fee is a good way for being more efficient in their network deployment. But it's also true that some further towers are going to be needed. I'm not violating any secret, so Iliad is launching an RFI for building more towers in France from 2026 to 2035. So, and this is basically what we say. The world goes on. What I don't think is that future beef to soup programs can be as expensive as it has been in the past. The past model was an M&A a copy-paste of an M&A contract. Going forward, this is going to be much more industrially driven. So what's the reasonable cost of building a tower? What's the reasonable cost of maintaining a tower? And what's the reasonable cost for renting a tower? This is more what we see going on. Hope I answered. And Raymond on Italy.

Yeah, so on Italy, as you will probably have seen today, we have signed and renewed an agreement with FastWebVodafone where we have today a bit more than 2,000 POPs and we have negotiated for an extra 1,000 POPs. to continue with their 5G development and its renewal for the next 12 years. This will enhance the coverage of 4G and 5G. It will cover more or less a bit over 1,000 sites. And what you have in the financials this quarter, and it will be again next quarter, is a one-off part of this agreement in order to reserve those spaces that they have asked for. That's clear. Thank you very much.

Thank you, James.

Okay, so moving on to Andre Kavacek at UBS.

Hi, everyone. Thank you very much for the presentation and the opportunity. I just, I guess, two questions. One is to follow up on the debate that we just ended. Marco, you mentioned the RFI that Iliad is launching. I believe last year you actually turned down, if I'm not mistaken, a similar small built-to-suit project for them.

Sorry to interrupt you, Andre, but the line isn't very good. Maybe you can try and speak closer to the phone. Is this better? Maybe a little bit slower. Hello? Hi, can you hear us? If you could speak a little bit slower and just closer to the phone.

Is this better?

Yeah, that's better, much better.

Okay, thank you. Apologies. So I wanted to follow up on the built-to-suit project. So you mentioned that Iliad is launching this RFI for a new built-to-suit program in France. I was wondering, because I believe last year you guys declined a small project from Iliad in Italy. I think one of the reasons was that basically the free cash flow profile was of paramount importance to you, so you did not want to get into a new built-to-suit program. I was wondering with the rapid decline, or with the visibility on the rapid decline of build-to-suit CapEx over the next couple of years, and at the same time, obviously, I guess, your desire for going after opportunities that would spur further growth over the mid-term, how are you thinking about, you know, your interest in new build-to-suit programs for Sonex over the mid-term? That's number one. And then number two, relating to the, I guess, higher-level situation in France, is Obviously, you are flagging, and I think very logically, the fact that you are so embedded with three out of the four parties that would potentially be merging in France. I was wondering from your perspective, you know, at which point in this negotiation process are you expecting to be able to go out to the market and communicate some kind of framework, at least, for an outcome relating to the network structures or the anchor contracts, rather, that you have with the MNOs? Because I believe in Spain, for example, from the moment that we had the, you know, Mass Mobile Orange announcement, we had seen almost two and a half years elapse between that announcement and your announcement of a renegotiation with the contract bearers. So I believe, you know, France is likely to be very different, but at what point are, like, have you had, you know, conversations with these companies already and at what point or how early in the process are you confident that you can actually give assurance to the markets that you are, you know, again, in like an MPV positive situation or neutral? Thank you.

Yeah. First, on your first question, I correct you mildly. So when we refused to enter in a new B2S program, it was not because of CAPEX restrictions, but it was because it was not a good business. So we are very disciplined in looking to the returns on our capital allocation. time ago you were making calculating the return starting from a zero free risk rate and now free risk rate is not zero cost of capital is not zero cost of capital is higher and so we needed to have a good return on capital if the return on capital is not good it's not good that's it period um so the fact that that's going forward we will have a a better cash flow does not mean that we are going to relax our uh our uh requirements in terms of return on the on the investments the return the investment have to be accreted but if the investments are not created they're not good investment they're not good capital allocation and they prefer to calculate capital uh as i did now for example in in buying shares so this is It's not that since I have more cash flow, I have to use the cash flow badly or poorly. On France, sorry, of course, if there is good capital to be put at work, more than happy to do it. France, we meet with our clients. almost once a month. And my guys in France, I meet with them, I can't say every day, but let's say even more frequently. The truth is that everybody knows that we have to be brought to the table early stage. But early stage means that you need to have at least a framework to talk about in this moment uh what what we discussed with uh with uh with our client is how can we make preliminary homework so our engineering department is making analysis by the way together with the with the mnos to understand what is the traffic per cell, per city. So we're making a lot of homeworks in order to be ready the day of tomorrow that we have to allocate not the non-urban, but the urban towers. Who is the natural buyer? Because there is not a single natural buyer. The natural buyer means that Tower A contributes more value to Orange and Tower B more to Wig and Tower C to Indian and we're going to allocate this way. That's the work we're doing. We're not wasting our time. But it's still too preliminary for having a real allocation, a real matrix of allocation. What we all know is rural is not going to be a problem, 0,0 problem. Urban, we all know that the problem is super modest. So, we are there, we're working there.

Okay, thank you, Andre. Moving on to the next question from Graham Hunt at Jefferies.

Thanks very much. I've just got two questions. I think just coming back to a question earlier, just on confirmation of the total capital flexibility of 10 billion out to 2030, but on that, sort of following on from that, if, as you say, the ratings agencies are comfortable with your outlook and even the risk around M&O consolidation, if they're offering you more leverage headroom, is there actually potential for upside to that 10 billion number? And given where the shares are today, what is it that's stopping you from sort of leaning into the buyback a little bit more? Maybe not in 2026, but could you see that stepping up a bit more aggressively over the following years?

Thank you. Thank you, Graham. So the 10 billion, we're already including a component which was a component of re-averaging. uh but the re-leveraging we are considering is staying within the five the five to six okay so uh let's say that uh uh we are in the ballpark of 10 billion and depending how close you want to stay 5.5 or 26 you can move a little bit up or a little bit down but this is the ballpark So, is it important to have this flexibility? Yes, it's extremely important. As I said before, we don't change uh our long-term view we want to be with a prudent capital structure uh now nobody see uh clouds at the horizons uh but uh if if clouds come all of a sudden uh capital structure can't be changed one day to another so it's much better to be prudent uh with good weather than uh then discover that you have not been rooted with bad weather um Is it possible to be more aggressive going forward? Yes, it's always possible. I think that these are long discussions that we're making with the board. Every time the board, we have, as you know, a capital allocation committee inside the board. It's, I think, one of the best committees. I've been on board since a long part of my life. It's one of the best I've seen operating in my life. And every time we have a good session, and this is one of the topics of how bold we should be in terms of how prudent we should be and what is the correct mix. Having the flexibility is having the flexibility. Five to six stays five to six, but having the flexibility is always good. So I leave to the board to make the final decision.

Okay, so now moving on to the next question from Fabio Pavan at Mediobanco.

Yes, hi. Good morning, and thank you for taking my question. Actually, I think there is a big debate in the Ministry of Travel a lot these days into making history leaders in the telecom space. on the need to speed up 5G coverage. There's low latency. It's crucial to sustain the take-up in generative AI. And I think it's also something you were mentioning that the regulators are flagging strong need for invest more in digital infrastructure. To me, it looks like we are concerned about MNO consolidation, which, as you pointed out, is something that It may take time to be implemented. While in the midterm, maybe earlier than this, we should have an increase in demand for new services from your side. What am I missing on this? And the second question, which is probably related to this, is market clearly is concerned and doesn't see any upside, which I do see on this. Do you think that this may lead as a consequence to some consolidation also in the tower space, not just in the telecom space at European level?

Thank you. Thank you, Fabio. Always good in your analysis. 5G coverage in Europe is way beyond the rest of the world. Asia, they are already talking about 6G. And in the U.S., the battle is really a battle of network quality instead of being a battle of who cuts the price most. You saw that AT&T and Verizon are fiercely debating for who has the metal of the best network. In Europe, we are still counting on the networks of the old good times. But the network of the old good times are suffering. Every time an operator installs a new network, a new 5G network, unlocks enormous quantity of traffic. And this is something that is mandatory, cannot resist more. So people want to have better networks. UK has been a clear example. The quality of the networks in UK is so dramatically poor that cannot stay like this. You live in Italy and every time you take a high-speed train, you have a high-speed train and low-speed telecommunication network. So it's there. We have to catch it. And we are ready to work together with our clients. I think that this is very important. So business is there. I have zero doubts. We are an essential facility. Digital is our life. Our life is digitalized. And we are the infrastructure for the digital, mobile, digital life. So we are an essential facility. It cannot go back. The tower consolidation. Well, tower consolidation, there are two kinds of tower consolidation. One is in-market tower consolidation, and the other is cross-market tower consolidation. In-market tower consolidation, every time it's possible, is good. uh because ultimately uh there are too many portfolios and some of them are overlapped so parts of the of the travel consolidation can turn into decommissioning of tower which turns into synergies into efficiency it would be good uh now is it possible uh as of today we don't see uh many many markets in which this is possible but There are markets in which the situation is turning bizarre. Spain has two and a half networks and four tower operators. It's bizarre. You live in Italy, and Italy is much more linear. There are two and a half or eventually three networks with two and a half slash three tower operators. It's much more linear. So this is what I think is possible in the near future.

Okay, so moving on to Akhil Dasani at JPMorgan.

Hi, good afternoon. I've got two questions as well, please. Firstly, if I could just maybe ask a question on your organic growth. If we look at the last couple of quarters, on a headline basis, it looks like organic growth rates have been slowing. So last year, you reported just over 7% organic growth. But the last three quarters, each quarter, it slows. I think this quarter, if you back it out from your year to date, it comes in at 5% for Q3. And I guess if we strip out the... um point that um ramon made about the italian contract maybe it's even close to four so i'm just trying to understand um what is going on and i know maybe there might be some distortions in there from works in study so maybe the slogan is not what it looks like so maybe we just help us understand what's going on top line performance and how we should understand it so that's the first question and then the second question is on consolidation um marco you've obviously given us a lot of color around why you're so confident and the protections you have in your contracts. But I guess I'd love to understand what do you think could go wrong? Because I guess if we look at the market today, that's what the market's fearing. I guess the comparison I often get from investors is the U.S., where U.S. tower companies are also very confident going into consolidation, but growth rate has slowed a lot. So what do you think, if you think about the puts and takes, what are the areas where there might be risk obviously i understand the strength in your contracts but you know where could there be potential areas of slippage in growth from consolidation thanks a lot okay yes an organic growth we we should split the organic growth

As you know, organic growth has a component coming from pop growth. There is a component coming from some engineering service like every company in the tower space. We adapt sites in order to collocate antenna and pops and objects, dishes, etc. And this is This is something that has seasonality because there are moments of the year in which you can do more and moments of the year in which you can do less. So if I take the co-location, the co-location we have had – More than an issue of a destination is more in the mix of the price than in the number of the pops that are collocated. i mean uh the mix is uh how many built to suit which are anchor clients very very high price how many are secondary tenants which are mid price and how many are run sharing which come with a with a lower price so uh the uh The price mix is something that people tend to a bit underestimate. In this moment, with the change of mix, so having less B2C growth, and more collocation-less round-sharing growth, you don't have only a different impact on capex, but you have also a different price mix, and therefore the impact on revenues is different from the past. In the past, a lot of the growth was coming from built-to-soup, so from micro-plans, also contracts with very high price. On consolidation, As we discussed several times, consolidation, you have to imagine consolidation as a two-moment event. The first part of the consolidation is a reorganization of the network. People talk about efficiency, but you have always to think, I cannot serve two customer base with a single network. So the first moment is how can I serve two customer base with two networks that have to be designed more efficiently. So this is the first part of the exercise. And the second part of the exercise is what is the quality I want to deliver to my clients. The topic of the quality is changing very, very, very quickly. If you talk with any expert in AI-driven application, they will tell you that it's not that it will drive to drive more data consumption, but it's a different kind of data consumption. Network has to be dense, network has to be more capacity for uploading, etc. You need to design the network differently. So yesterday we were talking with a very good CTO of one of our clients and he was telling us there is a topic of coverage because ubiquitous service is considered mandatory today if you don't have the the the good network in your subway you're you're not happy capacity is a big problem and accessibility is a big problem so everything goes in the direction that going forward more has to come so i'm i'm positive what was What was breaking until today? The fact that the MNO had not enough resources to invest. That's the truth. The truth is that they could not invest enough because they did not have enough money to invest. And the day they would have more money to invest, they would invest more.

Okay, so moving on to the last two questions. So we've got Avalash now from BNP.

Hi, good afternoon. Thanks for taking my questions. I've got two, please. First, just a clarification on the shareholder returns, given what you said about the sort of mix between dividends and buybacks. So if you think about 2027, should we think that it's, you know, the dividends is sort of 500 million growing by 7.5%, and then any further gap you sort of make up with buybacks so that you do at least 800 million a year from 2027 onwards as well. And then secondly, just a quick clarification, please, on the numbers in France, if I may. Did the EBITDA there continue to benefit from this sort of net benefit from pass-through revenues for the last few quarters? Maybe if you could just give some color there and whether you think that this is sustainable in the coming period as well, that would be helpful.

So Mark will take the question on the shareholder returns and then maybe on the detailed question on numbers, we'll take it in the call later in the IR team, okay?

Okay, on shoulder return, yes, we are committed to 800 million, not only for 26, but 27 onwards. uh so um as you as you said the 500 will grow 7.5 percent uh so the 500 becomes uh so helping with the math is 540 or something like this uh and the remaining part is going to be allocated uh depending where the share price is going to be in 2027 Please help me to surprise me and to make me the doubt that making share buybacks is not convenient. So it's a topic for the moment. Same as for the total amount, as we always said. So we committed to a minimum. And every time we can allocate more, we will allocate more.

Okay, so last question coming from Fernando Alonso, Avril, as Alonso.

Yes, thank you very much for taking my questions. First, a follow-up on the circular remuneration. So, I don't know if you can be a bit more precise on the leverage target on the five to six times EBITDA. I don't know if you want to be today in the upper end of the range or the low end, because, I mean, one times EBITDA is three to four billion of potential remuneration for the next four or five years, no? So I don't know if you can be a bit more precise whether you want leverage to be in the next years. And then second question on expansion capex, I've seen it is down around 10% year-on-year. Also, as a percentage of sales, it's down more than 100 basis points. I don't know if you have any – I don't know if this was temporary or a structural decline for the next a few years and do you have any internal target for expansion capex to be a support a percentage of sales in the in the next few years thank you cool um on the on the financial leverage uh you know the the being prudent

uh depends also on the on the moments uh on the climate on what is uh what is around us so what we said is that it wants to be in the five to six and then uh where if it is going to be more 5.5 or 5.7 etc it will depend a gazillion because they don't things i became cfo in 2020 in 2008 and the world exploded all of a sudden

and uh and uh people who was here for zero interest rates uh had another story so i think fernando if i can add on the capital markets day what we said is that our target was a billion point five point five and we would move up and down from five to six depending how interest rates are moving again and that has not changed we remain exactly the same interest rates are maybe a bit lower also with investment grade that we were not at that moment or we became just at that moment so more or less that has not changed also just to highlight one topic on that that is remember and we mentioned that in the capital markets day we deliver every year around 0.4 times and that's important because when you were saying no when we stand today we stand at 6.4 but with a capacity of the leveraging of 0.4 per annum

the way we consider expansion capital is not a percentage of uh of uh the of the revenues the way we consider is uh we go project by project uh we look if the project have a good uh have a good return uh this year we decreased uh a bit to the the expansion capital but it's not I think that considering a fixed percentage is very convenient for modeling, but it's not the way that we work every day. So countries send us projects, so they intercept projects, they pre-filter the projects in order to avoid us to analyze the projects that are clearly not convenient. And then they compete for a basket of resources. So best project goes first. So this is the way we work. It's not a fixed percentage. So I would be happy to have a very good project with very good returns going forward.

Okay, so thank you. Thank you very much, everybody, for being on the call and all your interesting questions. As always, the IR team are available and obviously in management. So please feel free to call. Thank you very much.

Thanks, everyone. Thank you.