Cellnex Telecom Sa Ord

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 2024 Resource Conference call. Apologies for the delay, but we've had some technical difficulties. Today I'm joined by our CEO, Marco Patuano, and our CFO, Raymond Trias, who will discuss the main highlights of the period, and then we will open the line for your questions. As a reminder, if you wish to ask a question, please press star five on your keyboard. So without further ado, over to you, Marco.

Thank you. Thank you, Juanjo. Good afternoon, everyone. Thank you so much for your time today. Sorry again for the delay. The platform is a little bit bizarre today and we have some problem in hearing the line. So I'll start commenting on our business performance. We are once again providing solid results this quarter, proving the resilience of our business model and aligning all the levels of our organization toward our public commitments. So this quarter has been marked by an excellent commercial performance and a consistent operational execution, with POPs increasing close to 11% compared to last year, around 7% on POP equivalent. Just as a reminder, we are providing you both physical POP and equivalent POP. Organic revenues, excluding from our numbers, mainly the impact from change of perimeter resulting from the remedy process in France, well, organic revenues increased 7.5%. Organic EBITDA after lease increased 11.1%, and our recurring levered free cash flow increased by 14.4%. Finally, our free cash flow reached €103 million, benefiting from €152 million received this quarter in the context of the second tranche of the French remedies. So we are on track to meet all our short and medium-term targets we have recently shared with you at the Capital Market Day. Moving to the financial strategy and capital allocation, just a quick reminder of our priorities set out at our recent Capital Market Day, and which we reiterate. A long-term leverage target of between five and six times net debt WDA, which we believe we can achieve by 2025. Having obtained our investment grade rating by S&P much earlier than originally planned, we confirm an unconditional commitment to maintain this credit rating level both by S&P and Fitch. From a leveraging perspective, we're making remarkable progress thanks to the disposal of the sites in France, our agreement in the Nordics and our recently announced exit from Ireland. This closest process is on track. We presented all the documents, the relevant documents to the antitrust. And leverage will be reduced by $971 million when completed and paid. Despite having already reached full investment grade status, we continue to assess strategic options for our portfolio of assets. And we can confirm that the Australian sale process remains on track with non-buying offers expected very soon. Please note that an early shareholder distribution in the form, for example, of a share buyback could be considered following the disposal subject to our leverage target and our rating commitment. Finally, as you have seen in our investor materials, We have started to report providing a more granular level of detail in terms of organic growth, business line, geography, and uses of CapEx, and we hope this will allow you to better understand the performance of our key value drivers. Having said this, I will now hand over to our CFO. Raimond, the floor is yours.

Thank you, Marco. Good afternoon, everyone. We will now provide a few additional remarks on the period and the financial strategy. This has been another quarter of excellent commercial performance, with organic POPs growing at close to 11% compared to the same period last year. Remember that we are starting to report physical POPs, which in our view provides a better reflection of the addressable market and our commercial efforts. This growth is due to the progress made on our B2S programs in France, Italy and Poland, and colocation POPs generated mainly in Italy and Portugal, with the rest of our markets showing a steady performance. POP growth linked to new colocations has reached a strong 7.5% this period, while B2S has grown 3%. Revenues increased 7% compared to the same period last year. Our adjusted EBITDA also grew 7%, our EBITDA after lease is 9%, and our recurrent lever free cash flow 14%. When excluding the impact from the change of perimeter that Marco mentioned, our numbers, our revenues increased 7.5%, our EBITDA 9%, and our EBITDA after leases 11%. If we now move to slides eight and nine, we are providing here as anticipated at our capital markets day, our organic revenues bridge for the period, as well as individual performance of our different business lines. So as you can see, if we take our contribution to revenues from inflation, collocation and build to suit, our organic revenues grow 7.5% compared to the same period last year. And going into the specific performance of our business, the tower segment grows organically 6.6%. Fiber, connectivity and housing services is growing 24%. Thus, small sales and run grossed 21% and broadcast increased 2%. Just a quick clarification on the average revenue per tower, which takes tower revenues expressed on an annual basis as per the last 12 months and the last days of the reporting period. Our free cash flow has reached 103 million euros, around 240 million euros more than the same period last year, mainly due to the 152 million euros that we have received in the context of the remedies process in France, as well supported by the improved recurrent level of free cash flow to date. Free cash flow is expected to reach between 250 and 350 million euros this year, compared to the 150 million euros generated in 2023. And one factor that determines our ability to generate this metric is capex. So we believe it is important to continue giving visibility on our different capex requirements. Maintenance capex is expected to remain below the 4% on total revenues, excluding the pass-throughs. and expansion capex should stay below the 500 millions in the year 24. Our expected B2C capex is around 1.3 billion euros in the year 2024, not considering the remedies. Going forward, our free cash flow generation will further accelerate as we are near the end of our B2S programs, and this will underpin our rapid deleveraging and will give us additional flexibility to improve shareholder returns as we mentioned in the Capital Markets Day. Moving to slide 10, we are illustrating our commitment with our previous Lease Efficiency Plan. whilst underpinning the message we conveyed at the recent capital markets day in terms of the importance for us to properly manage our main cost item. So our program remains on track and we continue to actively pursue efficiency measures in order to ensure a limited impact on our cash flow from rent increases and a large perimeter. Finally, let's take a look at our debt maturities profile on slide 12. As you can see, there are no maturities left in 2024 as they were repaid in January. Potential additional disposals may be partially used to repay variable debt in 2025, which today has a high associated cost as these lines are linked to Euribor. And we also might consider new debt issuance at fixed cost in the short term with the same objective. It seems that in the current environment, interest rates are likely to remain higher for longer, but we have a robust and well-designed capital structure which prevents us from assuming higher interest expenses. As you recall, 75% of our debt is fixed. Short-term maturities are already being managed, so our average cost of debt will only marginally increase in the next few years. With this, we remain now at your disposal to answer any questions. Thanks very much.