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Iliad and Cellnex form a strategic partnership in France & Italy

Infrastructure News - Published on Wed, 08 May 2019

Image Source: Iliad
Iliad SA announced that it entered into a series of agreements with Cellnex to form a strategic partnership with respect to the Group's passive mobile telecom infrastructure in France and Italy. In France, Iliad has entered into exclusive negotiations for the sale of 70% of the company that manages its mobile telecom infrastructure equivalent to 5,700 sites. In Italy, Iliad Italia has signed an agreement for the sale of the entire capital of the company that manages its mobile telecom infrastructure equivalent to 2,200 sites. The initial cash consideration payable to the Group for this transaction amounts to €2 billion.

The transaction’s strategic rationale is also threefold. First, it reinforces the group's investment capacity when Iliad enters a new cycle of growth and innovation. Second, it strengthens Iliad’s financial profile by reducing reported leverage by circa 1x EBITDA. Finally, this transaction unlocks an attractive valuation for the Group’s tower portfolio.

As part of the contemplated transaction, Iliad will enter into long-term service contracts. These agreements will comprise the provision of hosting services over mobile telecom infrastructure as well as the construction of new sites through a build-to-suit program setting a clear industrial partnership framework between Iliad and Cellnex and securing long-term access by Iliad to such infrastructure.

Following completion of the transactions, the Group will use most of the cash proceeds to strengthen its balance sheet.

FRANCE
Iliad has entered into exclusive negotiations with Cellnex for the sale of 70% of the company that manages its French mobile passive infrastructure ("Iliad TowerCo"), covering 5,700 sites by end-2019. Iliad retains a 30% minority stake in Iliad TowerCo in the transaction. In addition to this industrial partnership, through which Cellnex and Iliad will together manage and develop Iliad TowerCo in France, Iliad TowerCo and Iliad will enter into a long-term access and services agreement, providing for a build-to-suit program encompassing 4,500 sites (of which 2,500 committed by Iliad). The remaining 30% of Iliad TowerCo will be directly held by Iliad, giving the Group an operational stake in the company as well as an ideal positioning to benefit from the value creation in the mobile infrastructure market going forward.

ITALY
Iliad Italia has entered into an agreement with Cellnex for the sale of the entire capital of its Italian mobile telecom infrastructure management company Iliad Italia TowerCo is expected to comprise some 2,200 sites by end-2019 (pro forma for the contribution of sites to be delivered in the first quarter of 2020). The contemplated transaction also provides for the delivery of 1,900 new build-to-suit sites (of which 1,000 committed by Iliad). The envisaged transaction ascribes an enterprise value of EUR 600 million to Iliad Italia Towerco. In addition, the built-to-suit programme is expected to generate at least EUR 150 million of cash proceeds for Iliad Italia over the next 6 years.

The transaction will be subject to customary conditions precedent for this type of transactions in Italy. Closing of the transaction is expected to occur in the fourth quarter 2019 after the required clearance is obtained from the relevant regulatory authorities.

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Posted By : TelecomGuru on Wed, 08 May 2019
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