Cellnex in talks for deal CK Hutchison says could be worth $11.7 billion

MADRID (Reuters) - Cellnex CLNX.MC said on Wednesday it was in advanced talks with CK Hutchison 0001.HK on potential deals but that details were still under discussion after the Hong Kong conglomerate said they were nearing transactions worth 10 billion euros ($11.67 billion).

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The Spanish phone tower operator made the statement after the Hong Kong-based ports-to-telecoms group said it had reached “substantial agreement” to sell telecommunications infrastructure assets in Europe to Cellnex.

Such a deal would come on top of 6.9 billion euros in investments that Cellnex has announced or completed so far this year. Since listing in 2015, Cellnex has amassed a portfolio of 73,000 mast sites in nine countries.

Investor appetite for these assets has remained robust despite the coronavirus crisis thanks to their steady cash flows.

CK Hutchison said in a stock exchange filing the transactions would include agreements to provide services and support an accelerated rollout of next-generation 5G Internet.

These transactions would result in proceeds of approximately 10 billion euros, including minority partners’ shares, CK Hutchison said. It did not say what proportion the minority partners’ share would represent and gave no further details.

Earlier on Wednesday, Cellnex said it was considering potential investments worth up to 11 billion euros and reiterated a previous forecast for net losses in the coming quarters even as core earnings rose.

Launching 5G networks will require more masts to connect billions of devices, sensors and cameras in an “Internet of Things”, likely underpinning future investment in the sector.

Cellnex shares rose in early trade, outperforming a negative wider market .IBEX. They climbed higher after the announcement and were up more than 4% on the day at 1021 GMT.

So far this year, the company’s stock has risen 50%, making it the fourth biggest company in a Spanish stock market that has lost 30% of its value since January.

Reporting by Isla Binnie; Editing by Jane Merriman