It was an open secret that Cellnex Telecom intended to bring forward to this year its promise to begin acting as a dividend company instead of growth, a strategy it had undertaken with 2026 as the starting point. The tower had already announced that it was studying this possibility together with the rating agencies and, once it has obtained their approval to meet its leverage objectives – between 5 and 6 times EBITDA – and the investment grade that had cost so much to achieve until March 2023, it now announces that it is launching the strategic change with respect to shareholder remuneration. However, it does not do so through the dividend as planned from the year contemplated in its strategic plan, but rather it executes it through the repurchase of shares.
Why does Cellnex remunerate through the repurchase of securities? The reason is explained by the share price. This same week, Cellnex has set the minimum for November 2024, below 29 euros, weighed down by the evolution of interest rate expectations. It must be remembered that given its business profile, the stock evolves with a high correlation with respect to fixed income and in recent weeks the bonds have been trading with heavy losses due to the rise in inflation and the possibility that central banks will not can lower rates as quickly as expected. For that reason, Cellnex uses this formula and begins to remunerate the shareholder through the expected support they will receive in the value of their shares.very punished in recent months. In this way, the 800 million that it will use to repurchase the securities and subsequently amortize them represent a remuneration of almost 4%, exactly 3.9% at current prices.
The company explains that, however, they will not be able to undertake the repurchase of shares until they receive payment for the sale of the Irish subsidiary, for 971 million euros, scheduled for this first quarter of the year. Thanks to this extraordinary income, Cellnex will be able to begin repurchasing shares with a maximum period of almost one year, until December 2025. Cellnex is also unable to start the process during the restriction period prior to the presentation of the year’s results. 2024, scheduled for mid-February.
With the aim of ensuring the best possible price, in the same announcement through the CNMV they point out that the Council has also approved increasing the amount of the financial swap contract (equity swap) announced in November 2023 from 150 million euros to a maximum of 550 million. At current market prices this is equivalent to approximately 19.2 million shares, representing 2.7% of the share capital. All in anticipation of an eventual rise in the share price after this announcement and in the subsequent waiting period before actually beginning the buybacks. The Board of Directors of Cellnex has also approved to extend the expiration of said financial swap contract by 13 months, from May 2025 to June 2026.
Finally, the multinational maintains the plan to pay 500 million in dividends starting in 2026 and increase this amount at a rate of 7% in the following years and until 2030. This plan is maintained. However, both the buyback and this plan could be modified if there are more asset divestments by Cellnex, as may be the case of the assets in Switzerland, with which it could obtain more than 1.1 billion extra euros. Regarding this budding operation, sources close to Cellnex admit that the group maintains its strategy of studying potential asset sales with the aim of optimizing its portfolio with the aim of increasing the level of return to the shareholder. Likewise, the new extraordinary income from divestments will allow the telecommunications infrastructure group to consider a greater increase in the dividend in the short or long term.
Marco Patuano, CEO of Cellnexhas highlighted in the relevant fact shared with the markets that his group continues to fulfill its commitments: “With the approval of this share repurchase program we accelerate our plans to remunerate our shareholders, improving what we committed to in our Capital Markets Day held in March 2024. This operation is additional to the remuneration already announced for the period 2026-2030. In the current context it is, without a doubt, the most attractive option for our shareholders and all while maintaining our expectations. key premises, our internal financial policy and the investment grade by the rating agencies”.
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