Cellnex Telecom, S.A.

Good morning, everyone. My name is Juan Gaitan, Head of Investor Relations at Cellnex, and I would like to thank you all for joining us today for our 2021 results conference call.

As always, I'm joined by our CEO, Tobias Martinez; our CFO, Manuel Aisa; and our Deputy CEO, Alex Mestre, who will lead today's session. Throughout our prepared remarks, we will refer to the presentation we have published earlier today, and then we will open the line for your questions.

Handing over to you, Tobias.

Thank you very much, and good morning, everyone, and thank you so much for your time today. Let me please start with the main highlights of the period year that has been marked by a consistent execution with our business fundamentals and checks.

Our organic growth generation continues to be strong and sustainable with the new POPs on existing sites and our build-to-suit program generating 6.1% growth. The main driver behind this strong organic growth has been the significant contribution from our build-to-suit programs.

With more than 1,200 new sites already deployed this quarter and with no issues observed in our supply chain which allows us to meet on time our clients' network requirements. Also on the organic front, we are increasing the scope of our build-to-suit programs with existing customers, crystalizing opportunities to host new entrants in existing markets and extending our commercial relationship with our key customers in the U.K.

We continue to make process on our efficiencies plan and we are reiterating our 2025 savings target. We are presenting again a strong set of results, with revenues increasing 58% and compared to last year, our adjusted EBITDA, 63% and our recurring leverage free cash flow, 61%.

Moving to ESG, we are making steady progress on the initiatives set out in our ESG master plan, which is being translated into a significant improvement in our ESG ratings. In the current rising interest rate environment, I invite you to stop thinking of Cellnex as a bond proxy, and see it as a place to be in an inflationary context with the majority of our contracts linked to CPI and very well-managed OpEx base and solid capital structure and long-term thematics supporting our fundamentals.

88% of our debt is fixed. The remaining 13% is linked to Euribor at historical lows.

Our firepower is fully funded with no additional debt required. Our debt has no covenant, no hedge, no warranty, and we are expecting to refinance our 2022 bond at a cost lower that is its current coupon.

And we have also made the most of current market conditions and both own shares recently, reaching a level above 1% of Cellnex share capital. On M&A, we still believe we will be able to sign our pipeline of opportunities before the end of the 18-month period since the completion of our capital increase last year.

And steady progress is already being made. We are extending build-to-suit programs with existing clients in France.

We are acquiring sites in Portugal, we are reducing our rooftop mix in France in the context of Hivory's closing conditions, and we are acquiring Iliad's minorities in France and Portugal with the possibility of opening the capital of certain business units under the right conditions. And finally, we are exceeding all of our key metrics in 2021 on a like-for-like basis.

Please remember that our guidance include three months of Hivory, and we have been able to hit our targets with only two months of contribution from this portfolio. We are also presenting our 2022 guidance, which reflects our own internal assumptions in terms of timing of closings and impact from remedies with the information we have today.

And we are reiterating our 2025 guidance, including all potential impacts. If we move to the following slide, you can see here our 2021 results compared to our guidance.

We have been able to meet our targets with only two months of contribution from Hivory. And on the right-hand side, you can see for illustrative purposes what would have been our performance had with consolidated Hivory for three months, which would have resulted in a more accentuated outperformance.

If we now move to Slide number 4, we are presenting our 2022 guidance which is in line with market expectations and we are also reiterating our 2025 guidance, including all impacts. Our 2022 guidance has a number of assumptions which are onwards, explaining to properly understand how we see the year.

Starting from 2021, we had the positive impact from inflation in our 2022 revenues. Significant contribution, organic growth and the change of perimeters.

We are assuming that Hutchinson U.K. transaction will be closed and will contribute half a year.

We also include the expected impact from remedies in France and the U.K. in 2022, assuming an internal scenario based on our proposed remedies as well as other timing effects.

You can see, we are not expecting any impact in our 2025 guidance. As proceeds from disposal will be gradually reinvested so we are in a position, again, to reiterate our 2025 outlook.

Very quickly on the following slide, just a reminder that we have successfully contemplated 25 integration processes since 2015 of which 15 in 2021. All of our ongoing processes are progressing as planned, and as you know, we are still working on the closing on the Hutchison U.K.

deal. If we now move to Slide number 6, let me please share some considerations regarding our ESG approach.

As a company with a clear long-term view, ESG becomes an integral part of our strategy, involving all areas and markets. Our Board of Directors approved last year our 2021-2025 ESG market plan with 92 initiatives in place, each of them linked to the United Nations Sustainable Development goals.

We also created an ESG Committee that coordinates the actions to reach these goals, involving talent management, equity, cultural diversity, inclusion policies, environmental initiatives and climate change strategy. And on this slide, you can see the progress we are making on carbon footprint reduction.

Our social initiatives and corporate governance improvement measures. And with this, I will now hand over to our CFO, Jose Manuel Aisa, who will provide a few more details of the period.

Thank you, Tobias. If we move to Slide 8, I will provide a few more details on this period.

Our revenues at BTS 58% to €2.5 billion. Our recurring leverage free cash flow has increased 61% to €981 million.

Our total PoPs have increased 70% if we include the contribution of organic growth and M&A. And if we consider organic growth only, our PoPs has increased 6.2% compared to last year as a result of colocation and acceleration on our BTS program to meet our customer needs.

Moving now to the performance of our main financial mass metrics in Slide 9. On top of the figures we discussed, our adjusted EBITDA has increased 63% compared to last year with a slight margin expansion.

This EBITDA growth is mainly explained by the contribution from telecom infrastructure services, organic growth, vehicle servers and acquisitions, and by the efficient management of our OpEx base. As you can see in this slide, we have presented to you a flat OpEx on a like-for-like basis.

The following Slide number 10 explains our recurring leverage free cash flow generation in the period, and you can see here the contribution to organic growth from our different drivers. Collocation and associated services, build to suit escalators and efficiencies.

These elements combined €125 million in '21, a 20% growth compared to last year. And we also considered additional contribution from M&A and the rest of cash items below adjusted EBITDA.

Cellnex has generated again a strong recurring free cash flow growth of 61% compared to 2020. Moving to Slide 11.

Just a quick update on our lease efficiency plan. Please note that the management of our [indiscernible] lease base has always played a key role in our operations, and we keep demonstrating a solid execution, digitalizing efficiency out of our portfolio of sites.

In 2021, we have renegotiated more than 3,000 ground lease contracts generating €15 million efficiencies, and we are reiterating our 2020 guidance. In Slide 12 and 13, we can see the balance sheet, the movements compared to last year are mainly explained by our M&A and financial activity.

The increase in total as in total assets, as explained the corresponding increase in equity and liabilities as a result of our rights issue and the issuance of debt instruments in the period and respectively. Let me remind you our clear approach with regards to ports price allocations in the context of our strong activity, which verifies the allocation to fixed assets.

So the good use in our balance sheet does not correspond to any cash out. And a quick simile to the main characteristics of our solid capital structure.

We have closed to €8.6 billion of available liquidity, which means that we don't need additional debt to fund the growth opportunities in our [indiscernible]. The vast majority of our debt is fixed.

We're talking almost about 90%. We have not disclosure to the U.S.

dollar, and our corporate debt has no covenant, no pledge, no guarantee. So we have full flexibility.

Moving to Slide 14 now, here, you can see a summary of our recent M&A and growth activity, which has been mostly focused on the closing and integration of already announced transactions. reaching new agreements with existing customers, successfully securing connectivity projects under a neutral cost model, making progress with partners in the context of selective [indiscernible] trends in the U.K.

and the decision of United States. In total, we have closed deals for an amount of around €19 billion, negotiated growth agreements per amount of €1.9 billion and an asset disposal for an expected amount of €1.1 billion.

And with this, let's please open the line for the questions.

This is Abhilash from Berenburg. Two, please.

Firstly, just on - just sort of thinking about valuation and M&A. With changes in the rate environment, we've obviously seen valuations of listed out stock come under pressure both in Europe and U.S.

How do these changes factor into your thinking around M&A? For example, does your required rate of return threshold go up thereby maybe lowering the effective multiple that you might be willing to pay for acquiring some assets?

And does this maybe make it harder for you to compete versus, let's say, private sort of intra funds who have a longer view potentially on these assets? And then secondly, you mentioned today that you're signing a framework agreement with new operators to secure future organic growth.

Can you maybe give us some color on that, please?

Okay. So thank you very much for your question.

I will take the first one, and I think that our deputy CEO will take the second one, okay? So yes, your question is clear.

As a long-term investor, we do not tend to change the thresholds of our M&A activity. So we are not opportunistic in this regard.

We really think that our contracts have a lens of 30, 40, 50 years to take into account a normalized CPI normalized interest rates, when we calculate our IRRs. So it is true that right now, the interest rates are going up.

But at the same time, what I really take care of is that the inflation we project and the level of interest rate, we project are commensurate. And this is what, from a value perspective, this is what we have to look for.

On top of that, as you can see we have been very opportunistic in terms of financing. So obviously, when we talk about execution, we tend to somehow secure our interest rates as soon as the market allow us to do so.

So just from a valuation perspective, we are not going to change our strategy or our evaluation approach.

Yes, and in relation to the second question, unfortunately, we are under confidentiality agreements, we cannot disclose the name. However, the type of opportunity that we are chasing is in relation to a new entrant into a country where we already have presence.

So it's something similar to what we did, for instance, in Italy with Iliad when they started as a new operator. So they will be placing operator in one of our existing jurisdictions where we have presence.

So we are having great hopes around that pure organic opportunity that we believe we can see perfectly with the assets we have.

I have a few that are all related to M&A and the balance sheet of Cellnex as a whole. The first is - and it's just a couple of clarifications.

Firstly, are you still expecting the U.K. CMA ruling on the 7th of March?

Just if there's any visibility as to whether that date still sticks. The second is, obviously, you mentioned earlier in the response to the previous question, that you take a long-term view on the returns and requirements from transactions.

But I just wondered how the remedy requirements in the U.K. and France feature into that.

Are those remedy requirements maybe changing the way you think regulators are looking at deals? Does that change the way you want to derisk the sort of returns you want from transaction?

Just maybe a bit of color on how those things work. And then the last thing on M&A is just to understand.

Is there any update on the sort of probability weighted pipeline of deals you're looking at? In the past, you've sort of given us some flavor of where you are.

So just to understand how big is the pipeline of what you're looking at? And then the separate piece just linked to this is just your general balance sheet capacity.

Obviously, you've got very strong cash generation, very strong EBITDA growth. And you mentioned in your introductory comments that Cellnex will delever very fast from here.

I just wondered how you think about your prioritization should there be a bit less M&A opportunity going forward? And I guess the question is, would that be a point at which you might start to consider shareholder returns, whether that's dividends or buybacks?

Or are there other sorts of M&A opportunities beyond tower that you're thinking about?

Well, Tobias is speaking. I'll take your first question regarding CMA.

CMA is expected to get a final decision on March 7, and the keyword for us is confident. We are confident.

We do not have certainty. That's a different question we have to wait until March 7.And this is the reason why we are including on our projections in 2022 and 2025, the impacts on the remedies we have submitted to the G&A.

Therefore, everything is on track and everything in place. But again, we have to wait until March the 7th, which is the deadline.

Maybe Jose Manual, you can take the...

So when talking about the balance sheet capacity, the managed for the results. So we do have a commitment with you, which is very clear and is to deploy the remaining firepower that is in our balance sheet.

You know that in April '21, we said to you that our timeline was €18 billion, okay? And right now, after the transactions we have presented to you and you can find this information on Slide number 30.

Our pipeline is almost €8 billion. and this is a [indiscernible] we have to do is to deploy.

We really think that still there is opportunity in Europe, and there is opportunity in the tower market of Europe where in the doors of FID and as we have always said to you, I think that this remaining for should be devoted to M&A deals in which [indiscernible] has something to say. So we'll have a little bit on - a little bit of time in front of us, and we do the deleverage of all power.

And I think that regarding the CMA impact on the money capacity, which is the remaining question. No, I think that in that sense, Tobias already answered, we don't think that this is going to impact.

As said, what we are projecting is what we suggested to the CMA as a potential remedies. And it is yet to be seen whether our proposal has been fully endorsed by the CMA.

We are confident and that remains to be seen in the coming days, yes.

All I can tell you that we are not seeing a material change on our strategy, on our capacity in order to execute the M&A transactions because, from this morning, we have announced also an extension contract with BT, which matters a lot. I mean this is the way that we are creating value.

This is not just a pure, let me say, M&A. We like to extend our existing contracts.

We like to find new opportunities. And just to give you an example, in the first years of - sorry, in the first month of this 2022, we have engaged with our customers for €1.9 billion investment.

So fully all it seems that the company is not executing. Maybe it's not executing M&A, but we are growing and we are executing our also pipeline of opportunities with our existing customers in the existing countries, which is true.

But you are right, sometimes it's not, let me say, feasible.

Maybe if the question was more broadly thinking about how antitrust may limit our M&A activity. I think it's good to have a look at Page 14 where we are, let's say, announcing that we have signed two deals in France that are almost totaling 5,000 new build-to-serves where on the other side, we need to divest 3,200 rooftops.

So as you can imagine, these build to suits are going to be tower on rural areas, which is not where we are having a potential ceiling on market share. So almost additional 5,000 build-to-suits in France is a very remarkable new contracts that we have signed and that we will deploy in the coming years.

And finally, I think that we're also raising the potential impact of remedies into our [indiscernible]. And I think that Slide 21 can answer to that question.

As you can see there, we have divest and we have reinvest. And you can see that somehow the [indiscernible] EBITDA of our investments have been a little bit less compared to our [indiscernible] EBITDA of our investment.

So somehow I think that Cellnex is being able to maintain, at least maintain the initial IRR that we presented to you in a nominal acquisition. So we feel very comfortable here there are information the presentation.

And what is crucial when answering your question is that there is an underlining element in our M&A, which is tailoring. This has to be considered.

As we're talking about competition, being an industrial player allow us to do tailor-made solutions and to adapt to the different circumstances and regulations that [indiscernible] I think that the slide is a good estimate about this.

A couple of questions, please. The first one is just on this potential sort of minority stakes.

I think you've always said in the past that you're open to having partners in your subsidiaries. But in the past, it's been at the time of acquisition, so I'm just wondering what's the change here in opening up existing assets to other partners?

Is this just opportunistic way to generate more funds to invest in other areas because there's private money that's willing to pay high multiples? Just trying to understand what we should be sort of implying from that comment.

Then secondly, on Slide 26, thank you for this information. There's obviously lots of speculation on MNO consolidation in Europe this year given the news flow we've been seeing.

Is it correct to understand the slide is basically saying, on all your contracts today, typically, they're 20 plus 10 plus 10. But if we just assume that nothing was renewed, you can still pay down all of your debt.

Am I correct in understanding that if in the worst-case scenario, one of these operators wanted to cancel one of those contracts even before the first renewal. They would still have to pay the fees for the full, for the first term.

So whatever happens, you can still pay down all of the debt that you have. And then the final question is just a quick one on the Telefonica contracts that are coming up for renewal this year, and then I think there are some tranches in the coming years as well.

How negotiation is going on that front.

Simon, understood the first question it. One of the key characteristics of our financial policy is that it's flexible.

Our flexibility allow us not - or give us opportunity of not having any covenant or any restriction. And within this context, opening up some countries at the right moment, it can be a good source of funding.

It has to be at the right moment where we do think that the maturing point is the other way, opening up countries that are not mature enough doesn't make sense. Opening up potentially other countries and with the maturing points of the more or less reached.

This can create value for our shareholders and also to be a funding element, on these transactions. So this is something that obviously we cannot roll out.

In your second question was about Slide number 26, and there is a clear [indiscernible] say that let's call it a general contract, no, the mining life of our contract. We do a prototype MSA.

It is true that we will be talking about 10, 15 years, let's call it, 15 years. And we are representing here that our net debt evolution is we just do nothing and we just manage our current contract.

Before the end of this prototype contract we will be able to return with that. And here, we are not talking about renewing that contract because as same when you will know.

Basically, we have all of the clauses. So it seems that the probability of renewal is not low.

So yes, from a net debt-EBITDA perspective, it is true that the spot ratio is important. But as we have always said from the company, it is by far much more important.

The evolution of the net debt when we have contracts with such a big [indiscernible], which are the other graphs on this 26th slide that you can find on the [indiscernible] revenue, the patent net debt.

So as a CFO, I feel very comfortable about our current debt structure and the evolution of the company to pay back the debt before the end of this prototype industry contract. And Alex?

Yes, in relation to Telefonica, thank you, Simon, for the question, yes. So as you may recall, Telefonica has been, let's say, coming in different batches.

The first one was developed and [indiscernible] was Tesla, the one which was due to revenue soon is Padel and has renewed automatically with exactly the same conditions as they were before. So we keep working on the rest of the portfolios, but we do expect, as we already anticipated, no surprises around that.

Simon, just to recall that we are running a huge portfolio of assets from Telefonica, which are not overlapping. Let me say with other towers in Spain, which is very important.

I mean, no secret about that. So we are in renewing the contracts and we do expect to renew in the next month.

So this is the reason why. And obviously also on excellence, operational excellence matters in this regard.

Yes, it's a complementary footprint. That's good news.

Two questions, if I can. First on the 2025 targets, you've given us the good bridge on the divestments and new investments.

But there's still a 50 million drag on the 2025 numbers but your guidance is unchanged. But I just wanted to check, is it fair to think that you're tracking ahead of expectations, number one.

And then within that, have your inflation assumptions changed? And I guess explicitly what are you assuming for inflation over the forecast period?

And then the second question was just the new entrants, just a small clarification. So the 2025 guidance assume anything for a new entrant in this unspecified market.

Sam, I will try both of them. The second question, Bear in mind that we are still negotiating.

We can assign a fairly high probability that we will be able to reach a volume commitment, but this possibility is not included in our 2025 guidance. And also on your first question, there is - I mean, if you look at the chart we are providing in the CapEx and EBITDA evolution coming from the disposal and investment processes, it will be a small [indiscernible] to our assumptions, but we don't believe that this cap is enough for us to pass our previous guidance.

That's why we are keeping it. Yet, at the same time, we are not changing our [indiscernible], obviously, 2022, we will be seeing more [indiscernible] impact is already reflected in our 2022 guidance and in the medium term, we're not changing our previous assumptions in terms of inflation.

And then if I can ask one clarification on the last question as well on the Telefonica renewal, did you say you had already agreed one of the renewals and it's already been done or did I miss it?

Yes.

I've got two, please. The first one is around - is about organic new PoPs.

If we exclude build-to-suit, it looks like that you've added more than 1,000 new talents. If I'm not mistaken, it's a record single number in a single quarter.

How is that sustainable to see this - for this growth? And should we expect this to further accelerate in coming quarters?

And the second question is around Slide 30 about the pipeline. I just wanted to clarify something.

In the growth deals, it seems that we include the build-to-suit, the new build-to-suit opportunities as part of your pipeline. I just wanted to understand these will be I mean I think in the past, the build-to-suits you were saying that they were financed really with, let's say, organic cash flows from the business.

But here, are you saying that they are part - consuming part of your firepower or it's really incremental?

And I will start with the second one. We see the very beginning when we have defined the firepower and we can see all the prospectus of every single rights issue.

We have designed our firepower, taking into account the upfront and the build to suit program, okay, so we have considered everything into it. Happy to take it offline and to show you prospectus to the definition of our firepower.

So maybe last question.

Yes, I think on Page 10, there is a clarification on how much of the organic growth is actually coming from build to suit. Build to suit represents probably 50% of the organic growth.

So independently from that, the PoPs, which are pure location. I understand the question is we can expect a similar number on the coming years.

So our understanding is, yes, the demand is there as it has been proven. And it may be just because there are new entrants, it may be because there is a densification coming out from the [indiscernible] and or new PoPs generally required in order to put the coverage.

So there are several levers for that cotenancy to growth, and we continue looking after them, and we are transforming that in natural revenues in a sustainable way.

Two questions. The first one is on the 2022 guidance.

And I was wondering if you can help us with a bridge on the recurrent levered free cash flow. So starting from the 2021 figure, how do we get to the 2022 guidance split in the various components, which I presume are organic change in perimeter, French remedies, U.K.

remedies. So that's the first question.

Second question is just going back on the announcement this morning with BT, so you mentioned that's part of the things that you are very keen to do more going forward. Does the term in the press release where BT talks about announced terms so - which doesn't seem to refer to the longer length of the contract.

So I was wondering if more details can be provided, what are the announced terms about.

Let me try on the first one. So basically, what we are doing is we take a change of perimeter - so transactions that have not contributed in 2021 or which have actually contributed in 2021 the remaining part we are including in our 2022 assumptions.

On top of that, escalators plus inflation impact on our revenues, plus organic growth plus build to suit plus some modest increase in our [indiscernible]. So on top of that, that is the cherry, the traditional way to precatour following year.

This year, we are also projecting some impacts related to our remedies, both in France and the U.K. And I would say that nothing else.

You were asking about core cash flow. Please consider that our expectation for ground leases, payment in 2022 is around €800 million.

I think that this morning has been a bit of a controversy because I think that the market was using something called visible alpha as a source. And our interpretation is that maybe that those leases were a bit low for some reason.

But again, I mean, our expectation in terms of leases is €800 million, which is basically similar calculation. If you take €600 million in 2021 as the contribution of Iliad Italy plus Hivory plus copper content, you get to 150 plus an additional contribution from Hutch U.K.

build to suit and other M&A you refer to this €800 million of leases. And I think that is mostly [indiscernible] this added around the recollect cash flow guidance.

Also, the reiterated in terms of the 2025, we are not changing anything. Shall I take the DT1?

Look, we are very, very proud of having reached that agreement with that perimeter is today affecting, of course, to our tower sites in the U.K. So it's not taken into consideration anything in relation to the whatever outcome comes out from the CMA.

However, the understanding with BT is in a global basis. When we talk about the terms, what BT was facing is a massive renewal with Cellnex sites around 2030, which is also the moment where the winding of MBNL is about to occur.

And that's important for BT it's around 1/3 of the network. So we engaged in a very third source of discussions with BT by which we have agreed on an additional 10 years contract from 2030 to 2040 in all or nothing basis.

So in a way, we are having BT considered as into pack of being an anchor tenant. In addition to that, so also we need to have certainty in relation to whatever may happen after the MBNL solution that has been tackled also the possibility to have some benefits in relation to gain share.

Typical elements that we have in all our contracts. We've been now able to also deploy that with BT.

So we are extremely happy on having been able to close that agreement with it and being able to announce it today.

I had three questions, mostly around deals and then one around other capital deployment opportunities. So just on the deals, obviously, you mentioned that you're still confident you can deploy the balance sheet capacity by the end of 18 months.

But has the configuration of what the type of deals you're going to do with that money changed in your mind? Is there less existing tower purchase, more build-to-suit or if you could talk about how you see that playing out, that would be useful.

Secondly, just wondered how your funding for inorganic approaches is shifting. Obviously, you mentioned in the past using equity stakes in more mature markets to fund other deals.

I think this was alluded to in a question earlier. Could you talk about how maybe the Iliad minority agreement may act as a funding for deals going forward?

How you've maybe shifted your view on how to fund deals in the future? And then just thirdly, understanding that you've been conducting a kind of industrial road show of sorts over the last few months to speak with you customers and your corporate clients about interest in build-to-suit and fiber-to-the-tower and other ways that they may use Cellnex and you may provide a service for them.

I'm just wondering if you could give us an update on how that's going since we still haven't seen any further fiber-to-the-tower deal signed.

Okay, no, regarding the two first questions, funding and [indiscernible] of M&A deals. I think that so far, I think we do not change the main criteria, which is regarding funding flexibility and regarding of curation, you know that until now, it has been based on the matter.

So this was funding now. Cellnex has total flexibility to keep on issuing bonds or using our bank debt, which is now the most portable source.

And why not to open up some business unit, it will have to do. So we are seeing this financial flexibility.

And we are not changing this paradigm at all. It is true that maybe if the deal were to be big, we could also have farmers at the level of the target.

Why not is something that we are hoping to do so as long as we do control the target because we are in as a player. And obviously, we would like to operate the business and to extract maximum value out of it.

So no, yes, I think that the company is getting also bigger and therefore, the instrument that before we didn't use now, we can use it. Some countries are getting more mature because they have been with us for a long time, and then we can use as a source of funding.

There are the [indiscernible] no big changes. I think that if you look at those data we have signed, and we have closed in 2021, a vast majority has been [indiscernible] acquisition, but also we have found to you, we have been able to present to you all the base that are more basing active sharing or evolution in adjusted assets as long as our business model is respected.

So backlog, influential treatment open to share infrastructure with more players than the cost tenant. And these are the characteristics that we are going to change at all.

Yes. So following with that, Jose Manuel, on Page 14, there are a few examples of that beyond the 5,000 towers and trends that we've mentioned.

So in terms of adjacent assets, we are also announcing two additional data centers, central offices, which is what we are acquiring from Bouygues. There is a extension of the fiber-to-the-tower project also in France with Bouygues.

So there is a set of ready to sign agreement that we are today announcing to you. And in terms of prospects, one of the topics that also some [indiscernible] inflation to the active equipment.

So as you know, we own the Polkomtel deal, and we've been telling you that we were in an evangelation process among the difference. It's a difficult asset for them to actually dispose but we are starting to have talks with a few of them in order to actually consider that next step seriously, okay?

So there's nothing yet to be disclosed, but we are continually looking after to seize that opportunity properly, and we are very positive on that.

And I guess, just your last comment was partly an answer to that question on the industrial road show. What about operator interest in things like fiber-to-the-tower and it's going to have to come from somewhere.

Do you think that's - are you still confident that you're going to be a major player in the provision of fiber-to-the-tower or operators that don't already have it, which seems to be most of your towers?

Yes, what really matters to us is that there is a fiber-on-our-towers. And in some cases, the operator wants to do them on their own, which is fine because also that fiber can be used by other tenants on our sites to deploy their 5G services.

What is clear is that 5G is going to require high bandwidth in the backhaul. And the type of discussions we are having is, as mentioned, that we are more than willing to deploy the DAS deployed educate dark fiber, deploy the data fiber plus the electronic equipment to provide the connectivity.

So the scope of that type of investment is the one that we are having discussions. But this is a mass half.

And this is something that we always, I think, mentioned that the fiber-to-the-tower is like the roots of the tree. It makes the tree more difficult to be removed.

So it's for us an important element of our even [indiscernible] colocation, [indiscernible].

Two for me, please. Thanks for the information around the consolidation.

I get the opportunities presented. Can I just check the MSA protections that you've talked about?

And whether - when you sign an MSA with a customer, is it for the kind of spectrum within the perimeter at the time? Or does the agreement potentially extend to any new spectrum as a function of consolidation that they are able to bring it.

So can you just talk around that, please? And secondly, just to clarify on the Hutch U.K.

deal. I think the structure involved equity at the group level to Hutch.

I think it was around 5%. Now I think your share price is out of the range at the moment.

So has anything changed there or as we stand, would that then be deployed as cash - a cash payment to Hutch for that component?

Thank you, Ron. I will take the first one.

Well, you know that we basically charge by POB, okay? So if an existing client in the future requires more spectrum.

We don't have the ability to charge more. And actually, our understanding is that that this is the market practice, okay?

What we do have is rate production. So in the event of a client willing to host the spectrum of another client we basically we can charge more.

In some cases, it started to negotiation. In some cases, this incremental fee is included in the contract.

So we do have that protection. On the second question, Jose Manual, do you want to...

Yes, no, of course. And regarding the payment, which shares, it's an approval that was giving the assembly meeting, which has to be renewed in the [indiscernible].

And still, we are not in the closing of the U.K. transaction.

So there are some, let's say, months in front of us. So we'll have to wait before going into the details of the contract.

At the right moment, what the SME meeting will decide how to pay that transaction. So far, I think that would have to wait until the closing.

And the closing, do not expect it before June '22 this year. So it's not as we always said, it's is going to take a little bit of time sinter in February, some month in front of us.

Let's wait to see the evolution not all the elements.

I had two questions, please. Firstly, as you mentioned, you bought back around 1% of your shares during the quarter year-to-date, which I guess, it's fairly obvious the shares have been under pressure.

But can you maybe just explain that decision from a capital allocation point of view? I mean ultimately, if you're buying back shares, then that's money that's not available for the pipeline.

So just sort of how you see buyback generally from a capital allocation point of view would be helpful. And then just secondly, on the U.K.

transaction. I mean, it looks like the divestments you're assuming are around half of the EBITDA of the acquired asset.

Can you maybe just give a little bit of - I mean it's obviously a fairly significant disposal that, that would involve. Can you give a little bit of sort of confidence on how you get to that number?

I mean, you already have a buyer lined up, or what's kind of the thinking on how you get there?

Thank you, Rico. Okay.

I can maybe start with the second one, and Jose Manuel can comment on the first one. Yes.

On the - in the second, we have three as you - I see you're referring to the 50 million EBITDA that we are including in 2022 as an impact from a number of processes, okay? So basically, we are referring to EBITDA linked to [indiscernible] that we will be selling in France.

And also EBITDA coming from always this is theoretical, this is our base case linked to the site that we met is selling in the context of the remedies, if they are approved by the CMA. There is also some timing elements that might be playing actor in the U.K.

and we are also going for that in this 50 million. So basically, you have these active factors included in this figure.

And also on top of that, an allocation point of view, obviously, we devote €300 million plus to buy our shares is because we do think it's the best investment we can do. So in our capital allocation policy, the IRR, as you know, is one of the key parameters.

We track this project fully and that's the reason why we think [indiscernible] to buy shares. So it's as logical as this.

Is this going to reduce our firepower? Obviously.

We are devoting from initially other projects to buy our own shares because it's very much a profitable thing we can do right now. And this means that we will continue doing so in the future, it will depend on the evolution of the [indiscernible].

This year can be after that, even in a potential transaction, for instance. So that is - it gives us a lot of optionability.

The good thing is that buying right of shares at €40 at a very attractive IRR for us.

I just had two please. The first one is just on buying out the minorities from Iliad.

I was just wondering if you could give a little bit of color on why Iliad decided just to sell like 10% of the Poland stake and because obviously, you got like the rest from Salt and also from France. So is that just expectation in terms of timing then not having need of cash?

Or are you just expecting they will come back relatively shortly to just sell down the rest? And then the second question is regarding small cell and DAS that you can see you are now deploying in France.

Can you maybe give us a little bit more color into your strategy on the microgrid as I've seen some of your competitors being quite bullish on the prospects there.

Alex, no problem. [indiscernible] almost every year, you have seen how the has been acquired year-over-year since 2016.

The smaller states from our partners in general telcos in our target. I remember the first one was acquisition of 10% of Canada belonging to wind at that time.

So since that moment, we have always acquiring 10%, 30%, EBIT. It depends.

It depends on the evolution of the company, it depends on several factors. But at the end, as we described in our risk factors and our prospectus is that we will tend to acquire these minorities for sure.

Once the operator was the telcos can comport tends to leave. Another thing is this is leaving and before we're talking about potential incorporating someone acquiring those states.

And this is something that we are all going to do so. But it is a process that we expected and we have to manage in the future, depending on our pipepowered needs, okay?

And Alex, if you can take...

Yes, in relation to the densification of the small cells and DAS and everything. I think here, you've been listening to us always being quite prudent on that.

Others maybe have been a little bit more bullish on authorizing a huge amount of sales. But we always have quite clear the intention from our clients on that concept of squeezing the mark-up.

Meanwhile, you can deliver the services from a macro, and you have in other spectrum, then you will use the macro. Once the necessity of providing more traffic because there are two reasons for putting in a small cell or a system.

One is the need for traffic then you need to densify and this is where the small cells traction, and we clearly can see that, for instance, in London downtown. So step by step, we are starting to deploy small cells through the concessions we have in London in order to help the operators to cope with the higher traffic.

This is actually happening. Is it massive?

No. Will that one day be massive?

Maybe, but so far, we still are quite consistent on our vision of that. Another need for putting small cells [indiscernible] is that there are - and this is where the whole transportation railways element comes into the picture where there is no coverage.

And we need to provide continuous coverage through a transportation mine. And this is the case of France with all new lines, which are going through areas that are not having sufficient coverage in order to cope with the traffic of the metro.

And if you look it from the traffic demand perspective, it's quite interacting from an engineering point of view because you have the train, which could be filled with 500 people, all of a sudden just connecting to one station. And this is just for a few minutes because then they jump to the other stations.

So it's a quite challenging system and engineering problem to be resolved, and this is where our capacity of designing those systems. I think it's well appreciated by the partners, and this is how we've been able to win the deal in Paris with those two lines.

Yes, thanks very much indeed. Just a quick question on ground lease buyouts.

Could you just clarify exactly what was spent on that in 2021 and how much that's going to save FCF for 2022? And the second question is on ground lease inflation for 2022, what exactly are you assuming within your guidance?

We can start with the second one. Yes.

No, our leases were our best follow inflation, okay? However, our efficiency programs mitigate significance.

And you can see that to make a clear example in 2021, we guided you on a total €600 or €5 million of annual license, and we have EBITDA of €584 million. So this is a clear example that the next company quite well.

The payment of this. Also, we tend to improve when we communicate our charges, and we like being prudent and then, obviously, if we can perform better to secure it.

We feel comfortable.

And what is in the on the purpose on just to provide no clarity on the actual investment in €71 million in 2021, the order to cash advances to landlords and additional €80 million devoted to acquiring [indiscernible].

Sorry, so 61 million advances, 80 million to landlords. So what's the total?

71 cash advances and 80 acquisition.

Okay, fantastic. And that's - you don't say what that benefits you in terms of improving RLFCF in '22 and onwards.

But we should assume roughly on average, a 5, 6-year term.

Well, no, I think I go to 8 times correct and the time exactly. And the €800 million figure that I provided at the beginning of the session already includes this benefit.

But so remember that I provided blocks and I didn't include an inflation, okay? So I basically started with the €600 million in 2021.

I started adding blocks coming from either M&A or build to suit. But the fact that our figure for 2022 is not being inflated, with the current environment, it's also reflecting the fact that we are able to achieve savings, thanks to this investment.

So maybe a 15 million benefit comes from the ground lease buyouts.

Yes.

I've got two questions, please. The first question is just on your ability to expand into new geographic markets.

Remember, about a year ago, Alex, you presented a slide showing a number of new markets you want to go into, like I think it was Norway, Finland, Belgium, Czech Republic, Slovakia, the Balkans and the Baltics. Can you maybe just say a few words about any opportunities, any discussions?

Are these markets where you're seeing interest from telcos in disposing of their towers and whether this is still something that is active for you? And then my second question is just a follow-up on Nick's question on the ground lease buyout.

Can you maybe just say a few words about is there any potential maybe to extend or scale up that program? Because it looks like the returns that you generate on that program are very significant.

And you look at the multiples that you would pay to generate those efficiencies, they do appear to be quite attractive? Or is there some constraining factor there such as the amount of landlords that you're dealing with?

So just any flavor on that would be great.

You commented about my slide, so thank you, Emmet, for reminding me of the slide. I guess those slides were presented probably before the Hutchison transaction.

So after that, we already incorporated three companies. But let me remember a little bit our policy.

So we want to consolidate in those countries where we are already having presence. First, because we always look for a subsequent second transaction where we can have a second half core.

And this is part of the activity that we are [indiscernible] doing today. And of course, in the current, let's say, geographical footprint that we have in Europe, we are looking at an opportunity and there are quite a few of that.

So there are opportunities in Nordics, Baltics starting now also in the Western part of Europe, there are opportunities. And we are analyzing all of them which is the angle by which we can provide volume, and not only being that angle of our capacity to have the highest level of proceeds.

Our let's say, ability, as was saying before to tailor the deals in order to have the best solution for both parties is one of our abilities that we've been able to replace the parts, and we intend to continue as such. On the second question, maybe get a start if anyone wants to...

Conceptually, yes. I mean, clearly, yes, I think that there are maybe in trying to intensify this activity.

One is to secure land on where we have our sites. So that gives us peace of mind, also protect us from any potential choke in the future.

But I guess that we need to meet two additions for our financial. So the returns need to make sense, and the second commercial, maybe we don't want to massively scale up this activity linked to sites that maybe in the future, we don't really know if they are going to exist because there could be some many changes in network of the ratios.

So as long as we can find the opportunities and the figures make sense, and also there is the commercial attractiveness linked to the site. We are more than happy to continue considering this activity going forward.

Yes, that may be adding some comments on quarter - this is pure actionability, but it is not our base case. What I mean - this is not our best, best case because this is also very much with our core business, which is the infrastructure, which is the management and well again, open mind in order to look at further opportunities, optionability, that is not our best case.

Maybe just as a reminder, sorry, Emmet. The plan that you have that we delivered more than 3,000 as of now is targeting to reach by 2025 20,000 actions in 20,000 of our sites, which is a remarkable share of the 428,000.

Can we do more and we would consider that positive.

We just wanted to thank you so much for your time, as always. So thanks again, and have a happy weekend.

Bye-bye.