Cellnex Telecom (BME:CLNX): Endogenous Growth Faster Than 5G

The Golden Investor continues its tour around Europe. In Spain Cellnex Telecom is operating aggressively last few months. While Nokia (NYSE:NOK) and Ericsson (STO: ERIC) battle over the 5G roll-out, Cellnex Telecom (BME: CLNX) further strengthens their position as main infrastructure operator for wireless telecommunication in Europe.

Many companies benefit from having the fastest internet, from flash-traders to data centers and media companies. Not only is 5G much faster than 4G networks, it has potential to offer a network for smart solutions of the future. Where the world seems to steer into a path of full interconnection between humans and devices, the Internet of Things seems not far away with the introduction of 5G. Humans are driven by their urge of efficiency to lose less time possible living life at the fullest. This drive to efficiency in combination with the proceeds by being the fastest leads to the ultimate cocktail for the networking business to be profitable for many years. The internet becomes more important for society every year, just think of a week in which you can’t use the internet at all. Our internet dependence is greater than ever and Cellnex Telecom is profiting from this dependence.

Since their IPO in 2015 the company has grown to a leader on the Europese operator market, with an aggressive take-over strategy Cellnex is very aware of the fact that being the main operator on the market is a extremely powerful position. Recent months it has been very actively acquiring tower facilities and sites. Cellnex is the leading operator in many Europese countries. The company is now based Italy, Netherlands, United Kingdom, France, Switzerland, Ireland, Portugal and Spain. They are likely to try to enter many more countries seeing their aggressive crusade on the telecom market lately.

Figure 1 – Cellnex Telecom’s Aggressive Strategy

With a rise in share-price of almost 100 percent last year the company continues to grow in 2020. It reminds us strongly of the M&A-strategy of Valeant Pharmaceuticals a couple of years ago which resulted in a big deception due to their naive business model. However this acquiring-spree by Cellnex will be valuable for decades, since the communication market grows at an accelerating pace. A monopolistic position, which Cellnex Telecom seems to be heading to will provide ongoing cash flows for many years and beyond.

Disclaimer: The writer of this article does not own Cellnex Telecom (BME: CLNX) stock, this article should not be interpreted as investment advice or anything like that.

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