Spanish tower company Cellnex buys Arqiva sites in U.K. for $2.5B

cellular tower
The Arqiva purchase will bring Cellnex's total tower portfolio to about 53,000 sites. (Getty Images)

Barcelona-based Cellnex Telecom is buying the telecom division of Britain’s Arqiva. The deal includes more than 8,000 cell sites spread across the United Kingdom: Cellnex will own 7,400 sites and have the right to market about 900 additional sites across Britain.

The deal includes concessions to use street infrastructure as locations for wireless sites in 14 London boroughs. The parties say this is key for the rollout of 5G small cells in dense urban areas.

The acquisition is expected to close in the second half of 2020.

Arqiva plans to use the majority of the proceeds from the sale to reduce its debt. Arqiva CEO Simon Beresford-Wylie said Arqiva plans to concentrate on the provision of broadcast infrastructure and connectivity for its TV and radio customers.

Towerco consolidation in Europe

During 2019, Cellnex has reached various agreements that will add 24,000 sites to its portfolio in Europe. The Arqiva purchase will bring Cellnex's total tower portfolio to about 53,000 sites in seven European markets: Spain, France, Netherlands, Britain, Italy, Switzerland and Ireland.
In September the company announced the acquisition of Cignal in Ireland, which operates 546 sites. In June Cellnex struck a deal with BT in which Cellnex obtained the rights to operate and market 220 high towers located throughout the U.K. And earlier in 2019, Cellnex entered into long-term strategic cooperation agreements with Iliad - in France and Italy - and with Salt in Switzerland to acquire 10,700 sites. The prior deals also include some rights to market towers that aren’t owned outright as well as some agreements to build more towers.

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A recent report from analyst firm Moffett Nathanson advises investors to keep an eye on Europe as “it will be the epicenter of the next round of material tower transactions.”

The Cellnex-Arqiva announcement is just the latest in a wave of tower consolidation news in Europe.

In July Vodafone Group said it was spinning off its European tower business into a separate entity named TowerCo, which will be operational by May 2020. Vodafone says TowerCo will have its own dedicated team to manage its 61,700 towers in 10 markets.

And Telefónica announced it will speed up plans to monetize its tower infrastructure assets, giving itself a 12-month timeline to generate funds. Its strategy might include expanding to additional sites or striking infrastructure sharing arrangements with other local operators.