Cellnex seems to have no end to its way of acquiring the European Tower by diluting stocks and borrowing. According to foreign media Light Reading, a few weeks after buying the CK Hutchison Tower in Hong Kong for 10 billion euros, the Spanish company plans to invest 5.2 billion euros in France. Cellnex’s deal with Altice France and Starlight Holdco will give it full control over Hivory, which owns approximately 10,500 French towers used primarily by Altice SFR. The transaction has not yet been approved by the regulator.

As early as 2019, Ernst & Young (EY) estimated in a report written for the European Wireless Infrastructure Association that there are approximately 420,000 mobile base stations in Europe, and this number is expected to be 1% per year. EY data shows that after the latest transaction, Cellnex will have about 120,000 mobile base stations, accounting for about 29% of the 2019 data.

Cellnex has reached an agreement with Bouygues and Iliad, the two SFR competitors have sold towers to pay off their debts. If the deal with Hivory continues, the Spanish company is likely to own 26,740 towers in France. EY estimated in its 2019 report that there are approximately 54,000 towers in France, which means that Cellnex will control approximately half of the French market.  Three of the country’s four network operators will become Cellnex tenants. This does not look good.

Cellnex also dominates the Italian infrastructure market. EY data shows that after the completion of the transaction with Iliad and Hong Kong Changjiang Hutchison, it will have 24,549 towers, accounting for approximately 52% of Italy’s total in 2019.

Investors were attracted by the company that was eager to acquire, thinking it was a relatively safe bet. In a world of smartphone addiction and data consumption surges, service providers always need a place to hang their electronic devices. The iron tower they use is a source of guaranteed income and profit.

This explains why Cellnex’s share price has almost quadrupled in the past five years, and Cellnex’s market value (23.5 billion euros) is nearly seven times that of Telefonica (3.2 billion euros), even though the latter’s sales revenue is 28% of the former.

Cellnex plans to build more towers. According to its agreement with Hivory, Cellnex will allocate 900 million euros to build 2500 sites in the next eight years. The company also stated that its latest rights issue will fund projects totaling 18 billion euros, of which 7 billion euros will be used for Hivory and a separate deal with Deutsche Telekom in the Netherlands.

Service providers should be worried. Consolidation means fewer options, and rents may rise in the future. If there were no risks, Deutsche Telekom, Orange and Vodafone would not be so determined to retain a majority stake in their mobile base stations. However, if rents do increase, consumers may eventually pay for it. Perhaps the authorities should consider whether they should really stand by.