Marco Patuano (Alessandria, 1964) spent one year at the head of Cellnex. The telecommunications infrastructure company’s CEO’s tenure was marked by the execution of a strategic plan focused on organic growth and the achievement of the goal of achieving an investment grade rating by S&P. His goal now is to bring forward the start of large-scale rewards to shareholders, including Benetton or Chris Hohn, to 2025, with a clear commitment to Spain.
You are about to enter your second phase of work at Cellnex. What’s left behind and what do you see in the future?
The first chapter of Cellnex was a success. In 2015 we started from scratch, with a Spanish company present in only one country. But Cellnex had a strategic vision in which its home was not Spain, but Europe. The company has made more than 40 acquisitions in 12 countries with large debt but very low fixed interest rates and several capital increases. However, the pandemic, energy and geopolitical crisis caused a cooling of the economy and rising inflation. This business model had weaknesses: too much debt, lack of investment grade and the risk of rising rates. The company made a strategic pivot, stopped purchasing and focused on organic growth. A year later, we are at investment grade because we have made strong decisions in both strategic and non-strategic businesses. The result is obvious, we have fulfilled all the promises we made, everything. Not a single one was left unrealized. And this is the most important thing. After working with a management team that brought a lot to the company, we now live in a different time and a different strategy. This 14-member team shows that it delivers what it promises.
We are seeing a process of consolidation in the sector. What do you think this process will be like in the towers?
All published reports, whether they are called “Letta” or “Draghi”, point in the same direction: Europe must restore productivity. Digital infrastructures are needed to restore productivity, but to have them, we need sustainable industry leaders with investment capacity. How towers, I think we have more opportunities than risks. We have contracts with operators for 20, 30 and 40 years, we are a partner. The new Europe is hyper-connected, and antennas don’t fly, they need to be placed somewhere. We have a mantra: the infrastructure must be shared, because you can’t put antennas everywhere.
How far should government intervention go in strategic sectors in the face of challenging new players?
Look, Deutsche Telekom and Orange have always owned 30% of the shares of the joint stock company. And I don’t think anyone would accuse Christel Heidemann of Orange and Timotheus Hettges of Deutsche Telekom, respectively, of being government slaves. Christel has finished investing in Spain, and Timotheus is making a fortune in the US. We must dispel the myth that political presence in critical infrastructure affects business. These are critical infrastructures, and it’s no surprise that governments want assurances and peace of mind.
Criteria left Cellnex capital. He was the industrial partner who brought the Spanish character to the group. What does it mean?
In fact, very little. Criteria: very good shareholder, patient, competent and with a long-term vision. But then everyone has to make decisions. I respect Angel Simon and have a very good relationship with him, but we have to be objective. and decisions are made from time to time. In practice, this makes little difference. The participation criteria were relatively small, I don’t want to be disrespectful, but the capital was 95% international. Whether it is 98% or 99%, little will change. The question of Spain or headquarters is not on the agenda. We have five big countries: France, Italy, England, Spain and Poland. We own 100% of the capital and are planning to invest another 4 billion euros in the next three years. These countries bring in 80% of the income. Spain is one of them, and this is where Cellnex wants to do more. More resources for Spain? Tomorrow.
Where will these resources go?
It is no secret that in Spain, after the consolidation of telecommunications, there are three operators and four towers left. We’re not here to sell. What will happen on the Spanish market? No matter what happens, we are here to be the main characters. If we have to add more pasta, we will add it.
Cellnex has entered into agreements to sell its subsidiaries in Ireland and Austria. Are you satisfied with the portfolio?
Every good company always asks itself whether its investment in a country or business is well made. The profitability of each investment is analyzed. If the profit is not worthy, it goes elsewhere. Portfolio evaluation is never a static activity, you must continue to do it. There is another topic that needs to be demystified. This company has been asking its shareholders for resources throughout its life, but has never returned the resources. A good company rewards its shareholders. They are not asking us for 20%, they are not vampires draining our blood. Is it 3% or 4%. Given that debt is 3.5%, we cannot continue to not pay shareholders. You should start thinking about a shareholder compensation plan, and this is not only strategic, but also useful.
The strategic plan plans to allocate $3 billion to shareholder compensation between 2026 and 2030, although potential compensation was increased following the sale of Austria. What do you prefer: dividends or share buybacks?
Increasing shareholder compensation through 2025 should be an important goal for this management team. An industrial company does normal things, operates, produces profits, invests heavily and pays out rewards to its shareholders. 2025 should be the year we start doing something important. At the current share price, the value creation for shareholders from share buybacks is quite clear. It’s almost, as the English say, no braineryou don’t need to think about it much. From 2026, investors will receive high dividends: a minimum of 500 million euros per year, which we will pay. Among our shareholders there are pension funds and investors for whom dividends are relevant.
Cellnex is seeing a recovery in the stock market, but it is not gaining traction given its dividend obligations…
This is the path to follow. There are very technical topics that connect us to interest rates. With a large future cash flow, a low interest rate increases the value of future income because there is a lower discount rate. In the industrial component, we are doing very well, and this partly explains the recovery. The third quarter will be very good. A more favorable interest rate environment will give us tailwinds to continue the recovery. I’m very optimistic.
What will be the debt after the sale?
Debt will be within the parameters required by rating agencies to maintain investment level. Our debt is about 17 billion euros, and it is stabilizing and decreasing against the backdrop of increasing profitability. In relative terms, debt is improving. We are slightly better than the trajectory that the rating agencies promised.
As for Poland, there was talk about the possible entry of a partner. What is this option?
Poland was not a sale, it was another project with an investment of 3 billion euros. The two operators create a single shared network owned by a third party. Something that doesn’t exist in the world. In such a project it was good to have a partner who not only shared the risks, but also know how. Unfortunately, the clients did not come to an agreement, and we did not need partner. We continue our project, happy and satisfied.
Poland is another country where Cellnex has chosen an active network project. At what stage are you planning to export it to other countries?
The project is very good, completely on schedule. But this is a project that needs expertise very different. If we take another country like France or Italy, will our team be able to manage an active network? The answer is no, because it is a completely different type of engineering and operational activity. In the short term, I would be surprised if conditions changed enough to allow this activity to be repeated in another country.
As for organic growth, Patuano says the company will focus on what it does very well. 80% of Cellnex’s business is towers, and in five years it will remain the same. “What is the missing 20%? In Spain we have a large broadcaster, which is an important and critical business for us because it brings a lot of value. know how“says the manager and adds that this activity will change and become more digital.
Patuano sees huge space in the development of dedicated networks, since not all traffic demand can be covered by macro antennas. “The microantenna business is going to explode. Korea is an example of this. It will fill our business much more than other related areas where our know how It’s limited,” he says. A manager expresses doubts about data centers. “When we talk about a data center, we are talking about a critical and complex infrastructure that requires very specialized knowledge. At present, it is not obvious that the natural occupation of a “tower” is a data center. “I’m an enemy of reinventing the wheel,” he says.
The executive director also states that it is important for Europe to recognize the important role that towers play in developing efficient digital infrastructure in Europe. In his opinion, resources for improving digital infrastructure in Europe are not limitless. “The role of towers is to provide significant improvements in the quality of networks,” he says.
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