Cellnex Earnings: Keeps Heading in the Right Direction; We Like New CEO's Approach

Narrow-moat Cellnex performed nicely in its first quarter with strong colocation growth that drove tenancy ratios up and expanded the EBITDA after leases margin by 130 basis points year on year to 56.5%. Revenue grew 7.5% organically, 4.3% of which came from low capital-expenditure activities, colocation, and escalators. Italy and Portugal were the standouts given they have intense competition among mobile operators, with tenancy ratios expanding to 2.15 and 1.77 times respectively, from 2.05 and 1.67 last quarter. We maintain our EUR 52 fair value estimate and shares offer an important upside. Investors might need to be patient as we don’t see any imminent catalysts. Cellnex's share price is sensitive to changes in interest rates given its high leverage, so a potential reduction in interest rates could aid the share price and bring it closer to our fair value.