Shares of European telecom tower operators Cellnex Telecom and INWIT advanced more than 1% on Monday after Barclays upgraded its ratings on both stocks, citing excessive contract renewal risks priced into their valuations.
Barclays raised its price target for Cellnex to €38 from a prior level, while setting a new target of €8.60 for INWIT. The upgrades followed an analysis that current share prices embed assumptions of contract renewal cuts exceeding 25% for Cellnex and 20% for INWIT, which Barclays described as "excessively elevated."
The bank’s upgrade comes as European telecom tower stocks face pressure from a combination of slow mobile capital expenditure, consolidation in the EU telecom sector, contract renewal uncertainties, and higher interest rates. Barclays characterized the environment as "a perfect storm" for the industry.
Over the past 18 months, Cellnex shares have declined 12%, while INWIT has gained 28%, underperforming the broader European telecom sector’s 32% return and contrasting with a flat to negative performance in the U.S. tower sector.
Barclays estimated that Cellnex’s enterprise value to adjusted EBITDA for 2027 stands at 13.7x, compared with INWIT’s 11.6x. The firm also highlighted recurring leveraged free cash flow yields of approximately 11% for Cellnex and 10% for INWIT.
Analysts at Barclays noted that the worst-case scenario for Cellnex could include an EBITDA impact of around €100 million each in France and Italy, totaling roughly €200 million. This represents about 6% of projected EBITDA and 7% of recurring free cash flow, with a net present value impact estimated at €1.5 billion.
Looking ahead, Barclays projected potential annual shareholder returns for Cellnex between 2027 and 2030—via dividends and buybacks—of €2 billion, equating to more than 40% of its current market capitalization.
