Cellnex (CLNX): the boring tower stock I think the market is overlooking
Cellnex owns more than 113k telecom sites across Europe. Its biggest markets are France, Italy, Poland, England and Spain and it also has substantial operations in Portugal, Switzerland, Holland, Sweden and Denmark. By tower count, it’s number one or two in every country where it operates. Local mobile operators rent space on those sites to run their networks. Cellnex has ended up in a fairly powerful position without most people ever hearing of it.
For years Cellnex grew by buying towers and taking on debt. The share price didn't like that.
**My thesis** is that the business is entering a different phase: build towers where customers need them, get more tenants onto existing sites, spend less on expansion and turn more revenue into cash. The broader market hasn’t caught up, creating a value gap. At a price of €24, I think the shares could be worth around €41, thats 71% upside.
**Reason 1: Management changed the plan**
Marco Patuano became CEO in 2023 after activist investor Chris Hohn pushed for a change in direction. The idea was to stop chasing large tower acquisitions with borrowed money and focus on profitability and cash flow instead.
That matters because Cellnex already owns an enormous portfolio. It doesn’t need to keep buying companies for the business to grow. Management can work on getting more out of the sites it has, reducing debt, and returning cash to shareholders. I’m interested in whether that change finally shows up consistently in free cash flow.
**Reason 2: Its existing towers can earn more**
A tower can host equipment from multiple mobile operators. Adding another tenant to a site that’s already standing should be a much better use of capital than building or buying a new one. Cellnex calls this colocation.
It still builds its own towers when an operator needs coverage in a particular location. But that’s different from buying tens of thousands of towers at once. Managements idea is that more growth comes from adding tenants to existing sites, while new builds are tied to specific customer demand.
The contracts are worth a look too. They have an average remaining term of more than 15 years, and Cellnex uses all-or-nothing renewal clauses. This means an operator renewing a portfolio agreement has to renew the whole portfolio rather than cherry-pick individual sites. Renewals are at a historical high because of this. It does suggest the existing portfolio is hard for customers to walk away from.
**Reason 3: Europe has work to do**
Europe is behind China and the US in parts of its 5G rollout, particularly standalone 5G. GSMA estimates that European mobile operators will need to invest about €475 billion over the next decade to complete the move to advanced 5G and improve Europe’s position.
Better coverage and denser networks should require more infrastructure: space on existing towers, new towers in some locations, and smaller installations in busy areas. With its reach across Europe, Cellnex is in the conversation when operators need that infrastructure.
**Reason 4: Cash should start reaching shareholders**
The forecasts I’m using have free cash flow rising from €343 million in 2025 to €650 million in 2026 and €1.12 billion in 2027, mainly as spending becomes less intense. At the 24 euro price, the forecast dividend yield is 3.2%. Add €500 million in planned buybacks and the combined shareholder yield is about 6.2%.
Those are forecasts, so I’m not counting the money yet. But dividends and buybacks alongside debt reduction are a very different proposition from the old acquisition-led Cellnex.
**Full transparancy: the part that bothers me**
Net debt is around €20.8 billion, or 6.3 times EBITDA. The average borrowing cost is only about 2.1%, which means refinancing at higher rates could eat into the cash-flow improvement. Refinancing €1 billion at roughly 4% instead of 2.1% would add about €20 million a year in interest before tax.
Why i think this is not as bad as it seems: All contracts are tied to inflation. Meaning higher debt costs are largely compensated by higher revenue and profit.
There’s also a cash-flow number worth watching closely. Cellnex reports *recurring leveraged free cash flow*, which excludes spending on new build-to-suit towers. It helps show what the operating business generates, but it isn’t the same as cash left after all spending. The 2026 forecasts are €1.97 billion on that adjusted measure versus €650 million in regular free cash flow.
**TLDR:** Cellnex (CLNX)is a dominant european market leader changing direction from (cheap financed) debt-fueled acquisitions to maximizing profit from existing towers, improving free-cash-flow and return to shareholders. Share price has yet to notice the existing change, creating a value gap and making Cellnex the perfect turnaround canditate for a value investor.