UBS downgraded Cellnex Telecom to neutral from buy on Wednesday, citing prolonged uncertainty over carrier mergers and disputes over management service agreements as key headwinds.
The bank cut its price target to €29.5 from €43.5, a 32% reduction driven largely by a reassessment of growth assumptions. Approximately 85% of the target reduction reflected a halving of UBS’s terminal growth rate for Cellnex to 1% from 2%. The remaining 15% stemmed from lower organic estimates and a higher blended weighted average cost of capital, which UBS increased to about 6.3% from roughly 6.1%.
Analysts highlighted several unresolved issues weighing on the outlook. Carrier and tenant merger-and-acquisition uncertainty, ongoing MSA disputes, potential cannibalization of satellite coverage, and renewed interest rate sensitivity were cited as persistent risks. UBS noted that clarity on investment remedies for carrier M&A and responses from French authorities is unlikely before early 2028, while negotiations over Inwit’s MSA in Italy are not expected to see progress until the same year.
Financial projections were adjusted accordingly. Earnings per share estimates for 2026 were revised to a loss of €0.18 from a prior profit forecast of €0.12, while 2027 EPS was cut to €0.04 from €0.34. For 2028, UBS now expects €0.18 versus a prior €0.50 estimate. Revenue and EBITDAaL growth forecasts for 2025–2030 were set at roughly 4% and 6%, respectively, with free cash flow after land buyouts projected at about 54%.
Cellnex’s valuation metrics were also recalibrated. The company is trading at around an 11% recurring levered free cash flow yield or approximately a 5% net equity free cash flow yield for 2027. Operational assumptions were revised to include higher expansion capital expenditure due to an active equipment replacement cycle in Poland through 2029, delayed build-to-suit capital expenditure revenue delivery, and postponed revenue recognition in the UK and France amid sector consolidation. Financing costs were also assumed to rise.
