Europe took another step towards the independent tower model favoured by the US with the news that Cellnex has agreed to buy Portuguese operator NOS’s cell towers for EUR375 million (EV), with an additional EUR175 million being invested to add 400 new sites over the next six years.
Cellnex and NOS have signed an initial 15-year contract, which is extendible, that sees Cellnex operating the sites and NOS continuing to use them for its voice and data equipment. The deal involves 2,000 towers and rooftop sites located throughout the country, with approximately 40% in urban and 60% in suburban and rural areas, and is expected to generate EUR50 million per year for Cellnex.
Cellnex, which currently manages 61,000 sites across France, Ireland, Italy, the Netherlands, Portugal, Spain, Switzerland and the UK, has been steadily buying up towers across Europe from mobile operators. In October 2019 it bought Arqiva’s telecoms unit in the UK for £2 billion, which added 8,000 sites to its portfolio. It also spent EUR800 million on Portuguese tower company Omtel in January 2020, bought Iliad’s tower assets in France and Italy in December 2019, and 2,239 towers in Switzerland from Sunrise in mid 2019.
Europe has around 420,000 macrosites in total, and that number is not forecast to rise substantially despite the rollout of 5G. The reason is that some existing sites are being decommissioned as network sharing increases, while many are simply being reused for 5G equipment. Instead, operators are building out small cells and densifying fibre for 5G backhaul in urban areas, and in rural areas are adding modest numbers of additional sites to fill in not-spots. That means the total number of sites is only expected to grow by between 1% and 3%.
Selling off towers is one way mobile operators can quickly release CAPEX to redeploy on 5G spending or to reduce debt, and there’s still considerable scope for further tower sales in Europe which lags behind North America when it comes to the share of sites held by independent towercos.
In contrast to their North American counterparts, European mobile operators have traditionally favoured alternative models such as MNO-owned towers or joint ventures between network operators. This means that independents still account for less than 20% of the market, compared to 42% in LATAM and 67% in North America.