Good afternoon, everyone. My name is Juan Gaitán, Director of Investor Relations, and I would like to thank you for joining us today for our full-year results conference call. Today, I'm joined by our CEO, Marco Patuano, and our CFO, Raimon Trias, who will go through the key highlights of the period, and then we will open the line for your questions. So, reminder, if you wish to ask a question, please press *5 on your keyboard. So, without further ado, over to you, Marco.
Thank you, Juanjo. Good morning, and thank you all of you for participating in our conference call. It is now almost two years since this new management team is in charge, and on slide three, we summarize the many initiatives implemented during this new stage of Cellnex equity story. Please allow me to group them in some categories. The first is the long-term value protection. We've been able to reach excellent agreements with our clients, which are allowing us to protect our top-class backlog and improve the return on CapEx. Among the most relevant events are the mutually beneficial contract renegotiation with Vodafone and VMO2 in the U.K., with MasOrange in Spain. Thanks to these agreements, we removed any M&O consolidation risk in two of our most important markets, securing the current business and extending our strategic partnership.
Similarly, we renewed our non-anchor PoP also in France with Iliad, extending our collaboration and increasing our portfolio duration. In terms of CapEx efficiency, our colocation-to-suit programs with SFR and Bouygues in France are gaining momentum, and they involve now around 1,000 BTS to CTS transformations. The second is the operational excellence. We completely redesigned our operation. We reviewed our organization and our management team. We refocused our strategy. We sold non-core activities. We created Cellnex in order to improve our available land acquisition activities. As a result, we are meeting all our targets for the seventh quarter in a row, and we continue to build market credibility. The third is the asset rotation. Our assessment differentiating between core and non-core markets was made very quickly, as well as between profitable and less profitable assets, and we implemented a very focused strategy of asset rotation.
Our M&A team, brilliant when acquiring assets, proved to be excellent also when executing disposals. Nordics minority sale, Ireland sale, Austria sale, France remedies are a testament to this strong execution. With pleasure, I can anticipate you that the closing of the Irish disposal is going to take place next Friday, on February the 28th. The fourth is the management of our capital structure. We have achieved our investment-grade rating by S&P nine months before the original schedule, and we continue managing our balance sheet in a disciplined way. We bought back a very diluted convertible bond due to converted EUR 29, and we substituted it with a new instrument converting at 71.66. We issued two bonds, optimizing our balance sheet and reducing short-term maturities. We are reducing our leverage, consistently going in the direction of the target capital structure announced at our Capital Markets Day back in March 2024.
We finished 2024 with a leverage ratio of 6.4, down from 7.7 only 24 months ago. And finally, shareholder remuneration. As promised, we accelerated our shareholder remuneration, announcing EUR 800 million share buyback program, earlier and larger than initially expected and fully approved by our credit rating agencies. In order to benefit from our very favorable market conditions, we completed a new EUR 400 million equity swap, hedging the share price of our share buyback and ensuring an average price of EUR 32 per share on the covered amount. As we always said, we consider sustainable the shareholder return policy that we are starting in 2025, and therefore it can be seen as a floor for the future. Let's now move to slides four and five. On slide four, you can see the many initiatives that we are putting in place in order to improve our operational excellence.
It will take too long to describe each of them, but we want to convey the message that we are committed to constantly strengthen our industrial profile and to maximize the value of the assets we acquired during the expansion stage. Our industrial proposal is currently based on operational excellence and efficiency, implementing initiatives to improve customer satisfaction and optimizing the use of our infrastructure from a revenue and cost perspective. Improve organic revenue and boost the growth. We are deploying a more proactive commercial approach thanks to a better understanding of our clients' needs and anticipating the market demand. Innovation, we are testing new multi-operator technologies and embracing new partnership agreements with potential new players. And finally, the digital enhancement.
We have been able to complete in only 18 months the full integration of our IT systems across all of our operational chain, increasing the level of automation and productivity in all our processes. We are moving to a truly data-driven organization, boosting our human factor with the deployment of new business tools based on artificial intelligence. The tangible results of these initiatives not only driving efficiency in our operations. By the way, we increased our EBITDA margin from 59%- 61% also through those initiatives, but possibly, even more importantly, increasing the quality delivered to our customers. On slide five, you can see the results of a vast recent customer survey. Our quality indexes are all-time record high. Customer satisfaction, net promoter score, and customer effort score are materially higher than in 2023. Further improvement programs have been discussed with our clients.
Trust is the foundation for expanding our business relationship. Moving to slide six. We met our financial targets for the year. Revenues and EBITDA were at the upper end of the range, translating the operational excellence into economics. Recurring leveraged free cash flow is well above our target, and free cash flow is at the upper range. Constant financial discipline has been applied, ensuring that capital allocation follows strict governance rules. The operational leverage is de facto demonstrated in the progression of our organic financial indicators. Revenues +7.3%, EBITDA +8.8%, EBITDA +9.9%, recurring leveraged free cash flow +16.2%, and free cash flow two times higher one year ago. I will leave to Raimon to give you the details of this very solid performance, but let me only add only one concept.
Towers are a highly resilient business, and a strong exit from 2024 means a strong entering in 2025. One year ago, some analysts looked at our 2025 targets a bit doubtfully, and this possibly explained our next 12-month valuation ratio. I think that our 2024 results clear any doubt. The attractiveness of our business model and the visibility it provides allow us to reiterate our 2025 and medium-term objectives. If we move to slide number seven, we delivered also on our promise to accelerate shareholder remuneration. On February 28th, as I said before, we will close the Ireland sale. On March the 3rd, we will start the EUR 800 million share buyback. As you know, we are benefiting from our recent positive conversation with the rating agencies, and we are starting to give materiality to our commitment to return value to our shareholders.
The current very attractive share price has guided us to start with the share buyback program. If, on the one hand, we maintain our commitment to distribute dividends for a minimum amount of EUR 500 million from 2026 onwards, on the other hand, we reinforce the message that this amount will be only a part of our total shareholder return. Our potential for incremental capital allocation strategy is every day more evident. Our cumulative cash generation will exceed EUR 7 billion from 2026- 2030. At today's price, it represents 30% of our market cap. This initial share buyback will contribute to increase our recurring leveraged free cash flow per share by 16% by 2024, between 2024 and 2025, adding to our solid operational performance, a material first wave of reduction in the number of shares.
At current price levels, this is a highly accretive capital allocation with an implied IRR above 15%. On slide eight, I want to guide you through the rationale that moved us to pursue a share buyback at current stock price levels. Several indicators show us that our stock price is trading low. Our stock trades at a substantial discount versus an average target price of EUR45 per share, which still would imply an attractive 16-time recurring level free cash flow multiple. The valuation gap between public and private markets is too material, not only compared to our own disposal, but also looking at other recent transactions in the tower sector. Finally, our recurring level free cash flow yield is the highest in the sector without any particular factor that justifies such a delta.
Cellnex stocks continue showing a very high correlation with the U.S. 10-year bond, while Cellnex bond perfectly matched the euro rates. This decoupling has no industrial rationale since we exclusively run operations in Europe, and our debt structure has no exposure to the U.S. dollar. Therefore, we are convinced that it's a good moment for buying our shares, and moving to slide nine, we're a leading tower company with strong and secured growth perspective backed by the largest backlog in the industry and with the largest contracts with the client. Starting our buyback, we're moving a step forward in the repositioning of our equity story. We can now provide a shareholder remuneration yield aligned with the industry standards, and we will increase it in the coming years.
We maintain our strong commitment with the material deleveraging, which will further accelerate as we reach the end of our B2C programs and will allow us to reach our medium-term target leverage. I hand over now to our CFO, Raimon, who will give you more details over the period. Thank you, Marco. Good afternoon to everyone. Please allow me to provide a few additional remarks on our strong performance for 2024. As Marco explained, we met or exceeded our expectations. Revenues increased almost 8% compared to last year, adjusted EBITDA 8%. EBITDA after leases almost 11%, increasing, as Marco explained, the margin from 59% on revenues to 61% on revenues. Recurring level free cash flow, 16% up with a significant contribution from EBITDA, but also working capital management. Finally, our free cash flow more than doubled in the period.
It has been a year with a strong focus on execution, both in the commercial activity and in the cost and efficiencies, as we will explain later on. Please bear in mind that year-on-year trends are impacted by the change of perimeter linked to the remedies process in France. Austria, as you know, has been divested, but it has contributed to the numbers until the end of the year, so it's not affecting comparability. Our organic performance would be revenues, 7.3% growth, EBITDA almost 9% growth, and EBITDA after leases 10%. Since the end of the expansion stage, for more than seven consecutive quarters, we have managed to maintain this level of organic growth. Regarding our operational metrics, our physical PoPs increased more than 11,000, driving our tenancy ratio from 1.54 to 1.60, including BTS.
It is worth highlighting the acceleration in the site actions to improve efficiencies, reaching close to 3,800 actions backed by the creation of our technical cell number and the continued focus on CapEx optimization, having reduced EUR 200 million CapEx versus the prior year. As we explained at our Capital Markets Day, we were at the peak of CapEx commitments, and after the execution, year after year, we will see a decrease of CapEx deployments and a higher conversion of EBITDA into cash. Moving now to the next slide, 2024 has been another year of consistent commercial performance, with POPs growing at 6.5% compared to the same period last year. We are growing more than our peers, and we are doing so on a profitable and accretive basis.
This is explained by the progress made on our BTS programs, which represent 2.7% of the growth and comes primarily from France and Poland. Colocation grew 3.8%, generated mainly in Italy thanks to the branching activity in Portugal, France, and Poland, with the rest of our markets showing a steady performance. Moving to the following slides, we are providing here our organic revenues bridge for the period, as well as the performance of our different business lines. Our 7.3% organic revenue growth can be split into 2.1% coming from the escalators of the contracts, 1.8% from colocation, and 3.4% from BTS. All of our business lines show a robust and consistent performance during the year. Towers grew 6.8% organically. Fiber and connectivity is up 21%, mainly due to the projects with Bouygues Telecom in France.
As you know, we have been deploying fiber, and revenues do arrive a bit in arrears, and that is why in 2024 we have already seen a significant improvement. In terms of DAS and the active equipment, we expanded 16% with RAN services in Poland growing steady at 13%, and Italy and the U.K. leading the DAS growth. Last but not least, broadcasting grew 3% in Spain and Netherlands. As part of the strategy set out at our recent Capital Markets Day and our continuous focus on industrial excellence, we have the objective to become operationally more efficient, rationalizing assets, optimizing our cost base, and improving the group's overall productivity.
The consequence of this effort is that our efficiency measures in place have effectively absorbed the impact from inflation, with visible progress on staff costs, maintenance, and grant leases, where we have been able to offset contractual rent increases and the incremental costs associated with growing perimeter. Headcount decreased 7% in the year, while staff costs have reduced 2%. Please note that the business has grown 7% in revenues, including new sites. This means that on a cost per tower basis, savings are even higher. As you can see, although we have increased the number of towers and the number of kilometers of fiber, we have kept maintenance expenses flat, meaning that we have reduced 3% on a per site basis. In the case of the lease cash out, the situation is the same.
We have done more than 3,700 actions that have taken us to save more than EUR 20 million on the year and decreased the cost per tower almost 2%. All these efficiencies have helped us improve the BTS margin from 59%- 61%. We will keep working to achieve further efficiencies, as we already committed. On slide 16, you can see our CapEx split for the year with a EUR 200 million reduction compared to the prior year. BTS CapEx programs continue to decrease, and this will be the trend that will boost our free cash flow generation as we get near to the end of the programs.
Decreasing maintenance CapEx, evidencing the optimization of our operations, increase in other business expansion CapEx underpinning our non-tower revenues growth, as we have seen with the DAS and RAN service, and finally, acceleration of efficiency CapEx and land acquisition activity with highly attractive associated returns, and as explained by Marco, showing the results of the focus with Ireland. Finally, on slide 17, we reiterate our guidance for both 2025 and 2027, and we simply update our targets, removing the contribution from Ireland and Austria after closing both transactions and including the impact from our recently announced share buyback on the interest expenses for the year 2025. With this, we now remain at your disposal to answer your questions.
Thank you so much, Marco, Raimon. Now we will open the Q&A session. First question comes from Andrew Lee from Goldman Sachs. Please go ahead.
Andrew, can you hear us?
Can you hear us?
It's muted.
Can you hear me?
Yes, now we can hear you.
Yes.
You can? Okay, great. Thanks for taking the question. I had one in two parts, apologies, and then a second question. The two-part question was just on your announcement today that you've completed, sorry, this week that you've completed the MasOrange contract renegotiation. That was something you brought up at the third quarter results, and you gave us a bit of detail around it, but it's something that investors have been able to use just to reassure them on a couple of bear concerns in towers. The first was this concern about renegotiation of tenancy fees that has been speculated about in Spain. It looks like you haven't had a renegotiation on tenancy fees with this contract.
I wonder if you could give us any commentary around that to reassure on that side of things. And then the other element was, does consolidation reduce the scope of your commercial capabilities? And I think what you said at the third quarter was that the MasOrange contract, the new MasOrange contract, is at least as big as the previous one you had. Any kind of color on that? Just to reassure on both the risk from consolidation on your profitability in a market and also on the risk of renegotiation of fees. And then just the second question, which is really short, just is there any update or anything you can give us on your asset disposal strategy more broadly? You're obviously about to complete Ireland, but is there anything else on the cards and how are you playing that?
Is that going to be, we'll find out when you've done something or any color there will be helpful. Thank you.
Yeah, sure. Yes, I confirm that your understanding on the MasOrange renegotiation is correct. So fees have not been renegotiated. What we gave them was the possibility in some sites where MasOrange had two antennas, one coming from MasMovil and one coming from Orange, to decommission one of the two, but the fees have not been renegotiated. On the contrary, we converted the entire, as we told last time, we had several different contracts. Some were Anchor and some were second. We convert everything in Anchor and we extended the duration of the entire portfolio to 2048 with an intermediate step in 2038, but it's an all or nothing. So with no price renegotiation in 2038.
Same is correct to your understanding on the commercial capacity, capability. We agreed with MasOrange that a certain number of new installations and new towers will be built with us, and this is going to more than compensate the short-term decrease coming from dismantling some duplicated antenna, and so we will build with them. So what is very important is that putting together the two customer bases of MasMovil and Orange, the resulting entity is the largest in terms of number of contracts, and none of the two existing networks on a standalone basis is able to support such a quantity of traffic, the data traffic, because MasMovil clients, which were numerically quite high, were also big users of data. So there is a discrete quantity of new sites that have to be made. On your second question, the asset disposals.
First, as we said many times, closing Ireland was the absolute priority because for us it was relevant for kicking the share buyback. The closing of Ireland included the negotiation of the remedies in Ireland. Technically speaking, it was a buyer's issue, but as you always know, some seller support is needed. Now, what are we doing? We are assessing some verticals, meaning inside some countries, we're assessing vertical areas of business. In particular, we're doing this exercise in France, and we're looking to the portfolio where some of the countries are not contributing in terms of return on invested capital as we imagined at the beginning of the investment. We're talking about two good assets. We're not talking about bad quality assets.
So we are looking to, if there will be a disposal, the disposal needs to be at an adequate price given the quality of the assets, both the vertical and, let me say, the geographical one. What I can tell you is that the possible cash coming from the two disposals will be allocated both to debt reduction because, of course, some EBITDA will be reduced in the disposals, and so we don't want to worsen our credit ratio. And the remaining part will be allocated on further return to shareholders. Okay.
Thank you, Marco.
Thank you, Andrew.
Next question comes from Akhil Dattani, from JP Morgan. Please, Akhil, go ahead.
Hi, good afternoon. Thanks for taking the questions. Marco, maybe I can start with a follow-up to your last comments around shareholder returns.
There've been a number of headlines that have come out today just on commentary that you've provided the press around the capacity for future returns, so I guess I'd like to sort of flesh out exactly what you said. I mean, the headlines seem to be that there's scope to maybe tweak up the buyback for this year and that there could be scope for EUR 800 million of returns in total next year, so maybe if you could just help us understand what you're saying and what the right message is, and with that, is that without the need for more disposals, or are you already reflecting some more disposals in that, so just as a whole, how we think about that whole topic, and then the second question was around French consolidation.
On slide 19, you've given us some very helpful color around the way you've managed historic mergers and the way you've defended your turf. I guess one of the complications in France is that after SFR's debt restructuring today, the speculation is around a potential breakup. Now, obviously, it's going to be very hard for you to speculate on what this means, but I guess what I was hoping to understand is if you could help us maybe have a bit of a sense of what is your exposure to secondary customers and sites in that market, specifically to SFR, if you can give that granularity, and how would you try and think about and frame the potential impacts if we were to get some sort of breakup in this market? Thanks very much.
So I think that the journalist made a little bit of confusion on what we said, so let me clarify once and forever. So what we said, but it's not something new because I already said before, is that what we start this year is not going to be a one-off. So if we do 800 this year, this is for sure a floor. So in the next year, you have not to imagine that we will do 800 this year and 500 next year. By the way, if we do 800 this year, it's not for making 800 next year. Next year is going to be something more than what we do this year. And this is without making any further disposal. So we can do this, and we can repeat next year without making further disposals.
Now, if we make further disposals, we will do something more this year, but in a way that should be replicable the next year. In order to do so, what we don't like is to have an up and down in our shareholder return. What we do becomes a floor, and then we do the next year. And we try, of course, we never limit ourselves, and we try to do better in the coming year. I hope I was clear this time. On consolidation.
Can I ask you just one?
Yes, please. Yes, please. Just ask once.
Thank you, Marco. Yeah, just a really quick clarification. If you were to do more this year, how would you think about the merits of the dividend versus more buybacks? So maybe if you could just add that little bit of color if that's possible, please.
Yeah. Good question. This is the reason why I added in my presentation one or two charts explaining what was the rationale for making share buyback. In this moment, it's not needed to be a visionary to say that our share price is fairly undervalued, so at this level, it was not very difficult to say that making share buyback was highly accretive. Whatever we do, when we will count on further resources, it will really depend on where the share price is and what is the implicit return on a share buyback versus a dividend. I think that there is some more space for having a good return on share buybacks, and then it enters another concept, which is some shareholders, some very long shareholders, need some dividend in order to start their exposure with us.
At this level, I think that it's so convenient to have a share buyback that we have to ask those shareholders to be patient because in 2026, the dividends are insured. We're not touching EUR 500 million, but in this moment, it's too convenient to make share buyback. Going forward, we will evaluate depending on the share price. So please do your best in order to make us doubtful. So. Absolutely. Thank you. On the consolidation, I think that the most rumored case has been Italy in this moment. Despite the fact that France, SFR, so there is a net positive in the SFR debt renegotiation. Sorry, it's not exactly what you asked, but there is a positive in the SFR renegotiation because one, I would say very remote risk, but one remote risk was SFR potentially have credit problems in being solvent, which has been cleared today.
So Italy, we made a deep analysis on what are the contracts. So with Wind Tre, everything is screwed until 2030. So there was nothing that can be changed until 2030. And in 2030, the mechanics of the contract renewal are very well stated in the MSA agreement. So modest fluctuation around the price. Iliad. Iliad is two parts. The contract should be split in three parts. One, Iliad as an anchor. One, Iliad as a shared network with Wind Tre. And the third is Iliad as a second tenant. So Iliad as an anchor, no issue. Iliad as a shared agreement with Zefiro. Again, it's quite a resilient contract, the one between Wind Tre and Zefiro. And we have an interesting level of protection on this.
The second tenant, the second tenant contract, even in the remote case that all the sites in which the second tenant can be canceled, which based on our technical evaluation is basically not possible. But even in this remote case, the impact should be lower than below EUR 20 million. So I would say that it's not something I like, but it's the very worst case, which I personally don't believe it is possible. U.K., nothing more should happen until 2037. Spain, only positive on us. Poland, only positive on us. No consolidation risk in Netherlands and Switzerland. In the Nordics, I see some upside. Portugal, in this moment, there are no consolidation risks.
Great. Thanks so much.
Thank you very much, Akhil.
Next question comes from Ondrej Cabejšek from UBS. Please go ahead.
Hi everyone. Can you hear me well?
Yes.
Yes. Hi. Thank you for taking the question and congratulations on the results. I've got one quick clarification that I'm going to start with that should be very quick. So Marco, you mentioned you were talking about two deals and capital allocation from proceeds. Just to clarify, these were the two deals that have been closed already, or are you, because obviously there have been some press speculations, or are there two potential other deals than the ones that we have at this point?
Sorry, I didn't get you. I didn't get you very clearly. Can you hear me? Sorry.
Yes. So you were talking about the potential use of proceeds from two deals.
I was just wanting to clarify whether those are the two deals that have been announced already, so Austria and Ireland, or whether you were talking about two other potential deals because obviously in the press, we've had some examples.
No, no. What we're doing, the two deals closed, Ireland and Austria, allow us to do what you see, which is 800 this year, and to make and to have a floor. And then if we do more, we would do more.
Yes. Understood. Thank you very much. So just following up on the capacity to return cash to shareholders. So obviously, you've announced the 800, and you consider that clearly as a floor and as something sustainable going forward. But then referring back to your Capital Markets Day presentation from last year, the capacity that you indicated by 2027 for capital allocation was about 1.5 billion.
I was just wondering, with the dividend commitment of at least EUR 500 million for next year, obviously, there's going to be more than that, so more than EUR 800 million. But how should we think about the kind of 2026, 2027 total levels? Is EUR 1.5 billion in 2027 the kind of ambition that we should be thinking about, and is the path towards that a linear progression? And then second question, maybe again referring to the CMD, please, because you obviously spent the last year really focused on some of the non-core disposals, fixing the balance sheet and restarting the shareholder returns earlier than next year. But looking at the CMD, you did present a couple of initiatives such as land management, collocation-to-suit, etc., that maybe have not been as much in focus over the past year.
So just thinking about the next couple of years for you as management, what are the key focus areas that we should be expecting some more results from? Thank you very much.
Okay. So first of all, the medium to long-term shareholder return strategy. We made very clear that we have once the build-to-suit program fades, we have a very generous cash flow generation. We want to be at the top of the industry in sense of shareholder remuneration. So our industry has a clear, let me say, has clear metrics. So there are not so many outliers in the industry also because we're not so many. So we want to align with our best peers. Some of the Americans have demonstrated a very solid result for, I would say, almost a decade.
I think that this is the kind of credibility that we should aim to, so to be top-class, credible, and absolutely resilient in different market conditions. So yes, there is space for having a generous shareholder return, and we will measure it as being top-class in the industry. Then every year, we will make our capital allocation, and we will do, and we will choose also the instrument that we will consider more appropriate. Then the second question is very interesting because I think that there are two things that are driving our industrial attention. Point number one, growth. So it's now seven quarters in a row that we deliver growth well above all our peers. And we are not in emerging economies. Okay? So it's not, delivering growth in Europe is not the same as delivering growth in South America or in Africa. Okay?
We are delivering from seven quarters in a row. If you think that we are lucky, it means that we are very lucky, and there is more to go. More to go. This is our priority. This is our priority is beating inflation is not ambitious enough. We have to continue to deliver solid growth and a solid growth with a very efficient capital allocation, so it cannot be a growth coming with two billion of CapEx every year. So this story of two billion of CapEx, sooner or later, should finish. Of course, you cannot imagine zero CapEx, so there will be a reasonable amount of CapEx, but we have to deliver good growth, and the second is the operational leverage.
Again, seven quarters in a row that we grow in EBITDA more than revenues, in EBITDA after lease more than EBITDA, and recurring free cash flow more than EBITDA after lease. This is discipline. This is work. This is continuous work on operations. Simone and his team are making our Chief Operating Officer and the team and the country CEOs are making a tremendous effort, and we identified some clear areas. You mentioned the land acquisition. Land acquisition is a clear area where investing money has a rate of return which is very attractive, and by the way, our American colleagues did, I would say, a decade before us, and the results are under the light of the sun. So they are making very good numbers on EBITDA after lease for the simple reason that they don't have the lease, so it's not a secret.
We are redesigning, completely redesigning the operation. This year, we have been able to reduce the maintenance cost, having a sort of 4,000 hours more than the year before. We're reducing the headcounts. We've reduced 7% next year. So it was in the newspaper. We are negotiating with the unions a reduction of 20%, between 20% and 25% of the headcount in Spain. Why? Because we are terminating a non-profitable contract, and we are making a big automation program of most of our NOC, of our network operation center, which has been a program of high automation. So I think that those are the top priorities. At the end, we are an industrial operator. We are not an M&A buffet. We are an industrial operator, which means make more growth, make fantastic, deliver fantastic quality to the client, and increase the efficiency every day, every day on earth.
This is our priority. Ondrej.
Thank you very much, Marco.
Thank you.
Thank you, Ondrej. Next question comes from Maurice Patrick from Barclays. Please go ahead.
Thank you for taking the question. Yes, Maurice from Barclays. Just a couple from my side, please. Marco, thank you for your earlier comments about the consolidation risk, and you talked about some of your contracts and the moves you made. I note in the U.K. with Vodafone and Hutchison shortly to merge their business. You did sign a contract extension, I believe, with Vodafone last year. Vodafone is talking about, however, a 10,000-site reduction over the long term as a result of the merger, while maintaining their estate on Cornerstone.
I'd be curious to understand the specifics that you've agreed with Vodafone, which gives you the confidence that you can continue the sort of perimeter that you've talked about in the medium term. The second question, just on Zegona and Vantage Towers in Spain, there seems to be some question marks as to whether or not, well, I mean, at the last conference call, you questioned whether or not Zegona could, in practice, migrate its sites off Vantage Towers if it wanted to. Would you be willing to engage to help them do that? You can see from your perspective how it would increase or improve your Spain revenues, but it would also maybe signal to other participants opportunities in other markets. Keen to understand your positioning on that. Thank you.
Thank you. On England, with Vodafone, we had a certain number of antennas that were contracted by CTIL. So our client was CTIL. But what we did, and it was a secondary tenant, what we did was we've been sitting with Vodafone and with VMO2. We decided to negotiate directly with Vodafone and with VMO2. We allowed them to swap some antenna on some sites. So you don't like site A, but you like site B. Okay? For me, it's the same. Move on your expenses. Antenna from A to B. If you're happier, I'm happy the same. And we are referring to approximately 2,400 towers that were interested by this contract. So we gave them this flexibility to optimize their network. They made the exercise. They made the network replanning.
We agreed that this new contract would have been built with the same rules of an anchor, of course, with the prices that were the prices negotiated originally with CTIL. If they want to make 10,000 tower efficiency, I think that we contributed to their efficiencies, not reducing the number of the tower, but using the tower they need and not the tower they don't need. I'm confident that our relation with Vodafone will not be problematic because of this. The contract they have because of Hutchison being an anchor tenant, well, it's a contract lasting until 2037 with an all-or-nothing renewal clause. Let's have a conversation in 2037. I don't know if it will be with me or not. I'm a bit doubtful that it will be with me, but not before 2037.
On this, please allow me a little note on top of this. Vodafone Network will move from a sort of 17-18,000 tower antennas to 26,000 antennas, which means a significant material quality improvement. BT, or Everything Everywhere as you wish, and O2, I don't think that they can just avoid to respond to such a [move]. We're talking about a 50% quality increase. So we're not talking about peanuts. We're talking about a 50% quality increase. I don't think that any of the two operators can compete with MergeCo unless they build more. Now, if we can argue that VMO2 has some interest with CTIL, I would say that BT has not particular interest to expand their cooperation with CTIL. I see England as a very interesting area for expanding our business. Where do firms gain advantage? Well, it's an interesting saga.
What I can tell you, I'm not in the day-by-day, of course. What I can tell you is that the noise on price renegotiation is much lower than before. There is not such a strong noise. There has been some rumors about Zegona thinking to take some actions on if they would prefer to create a RANCO, not to create a RANCO. But we are not in this. So we have not been asked to be in this. What has been effect is that we have been asked if we could contribute to a complete migration from Vantage to the sum of the other three towercos. We gave our technical specification, and as far as we know, they were short of some thousand towers from making the complete swap. Punto. We did not. We made our commercial discussion with them. Of course, for us, Spain is a core market.
Our two largest clients are Orange and Telefónica. And for us, Vodafone Zegona is an upside potential. On this, I agree with you. Same as Luigi. All by answer. Thank you.
Thank you.
Thank you, Maurice. Next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead.
Good afternoon, everyone. Thanks for the questions. I've got two, please. It's going back to the capital allocation framework. And I think the guidance given at the CMD was greater than EUR 10 billion cumulative cash up to 2030 with the floor of EUR 3 billion of dividend. The other three buckets being buybacks, extraordinary, and industrial ops. It's also to get a sense of what could be included within these industrial ops. Is this more fiber to the towers? And what could be the quantum of that investment?
And secondly, Marco, you outlined some of the efficiency levers, and you've made good progress with the LandCo accelerating the number of site actions. But something else which you previously mentioned, which was the combining the build-to-suit, I think you alluded to it a bit earlier. If I look at the tracker sheet, I see there's been some small reduction in the targeted BTS in Poland, Poland being one of the markets which I think you had identified as have been ripe for combining BTS. So have we seen progress here on this front? And can this be exported to some of the other markets? Thank you.
Thank you. In this moment, the most important industrial project that can use materially capital allocation is land. We are not designing in this moment. So what we exclude in this moment is new geographies.
We're not looking into any new geography. Looking around our portfolio, the possibility of making a selective portfolio acquisition. Well, there are not so many countries in which we can make a portfolio acquisition without touching the roof of the top of the antitrust. In the Nordics, we said that there is a possibility. The financial impact, please remember that we welcomed a caution order exactly because of this in order to mitigate the financial impact on us in case of portfolio acquisitions. We are talking about two relatively small countries. The number of towers of the portfolio is not monster big. Having said that, we don't see larger portfolios that we can use. We are working on a project of tower rationalization. This is a very interesting activity. We are mapping the entire portfolio of towers.
We are using our network planning capacity in order to understand if not only we can do CTS, which is transforming a build-to-suit into a colocation, but also if we can make proactive dismantling, proactive decommissioning without creating any problem to our clients. Basically, what we offer to them is we think we prove to them that their coverage cannot be affected if we rationalize the portfolio. It's a project that Simone, our COO, is working. Of course, the big countries are the usual suspects because every time you touch a big country, you make it material in terms of numbers. For you to know, the build-to-suit to colocation-to-suit, now we're talking about 1,000 towers, which starts to be a material number. It refers to the sole French perimeter.
You mentioned Poland. And Poland is, let me say, the total stretch of the concept because in Poland, we have to build a new 5G network for our client, which is in our plans. So it's not something that we did not have in our medium-term forecasts. Now, the real question is, since we build a new 5G network, can we optimize the network design between our two clients? So is it possible to imagine that we can deploy a new 5G network, migrate the 2G and the 4G, and to build the 5G and to have a topology of the new network, which is somehow more optimized in terms of use of existing sites, so ending with some decommissioning? The number of potential sites is very big. And therefore, we are moving the numbers in this moment.
It's an interesting case that is driving a lot of the attention of our network engineering department. But it's going to be really, I think, one of the most important test cases for our company in 2025 and 2026.
Thank you.
Welcome.
Next question comes from Rohit Modi from Citi. Please go ahead.
Hi. Thank you for taking my questions. Most of them have been answered. Just a couple on your guidance from this year, given you have exceeded your guidance on recurring leveraged free cash flow coming from maintenance CapEx and funding capital. That doesn't look like it's flowing through into the next year, given you're maintaining your recurring leveraged free cash flow guidance. So the run rate seems like maintained for the next year, not declining to what we have done in 2024. So I'm just trying to understand the mechanics around that.
Is there a higher interest cost that's coming in because of buyback and refinancing into that?
That's the case. Thank you, Rohit, for the question. It's Raimon. As you mentioned, it's clearly the increase of interest costs and a bit of taxes that it's mainly impacting next year from the perspective of reducing a bit the number on the free cash flow because we are improving recurrent level free cash flow. We are improving adjusted return and revenues. And although we are increasing the free cash flow, it's true that it's not that significant because of those impacts. Keep in mind that still for next year, we are still having almost similar amount of capital we had this year. This year, we closed with EUR 2.1 billion. Next year, it's going to be around EUR 2 billion as well.
This year, the amount of remedies that we had coming from France have been above EUR 300 million. Next year, it's going to be much lower than that as well because the remedies are almost finished. We just need to collect a few of them. So those are the impacts that do change a bit the free cash flow.
Thank you.
Thanks, Rohit.
Next question comes from Fabio Pavan from Mediobanca. Please go ahead.
Yes. Hi. Good morning. One quick question for you, Marco. I remember that at the time of the capital market day, we were discussing about sector consolidation also for European towers. We were thinking about second half 2025, early 2026. So what do you argue on this? Is this still something that may happen at some point, or in your view, something that's changing this approach? Thank you.
Say it up, Fabio. Good question.
I was cleaning my crystal ball, and I broke it. So it's a bit difficult to give the answer. I honestly was thinking that interest rates, especially on U.S. dollar, could have been lower. And with the lower interest rate, large-sized M&A transaction could have been easier. Now, in a higher-for-longer interest rate, at least U.S. interest rate environment, the real answer is I don't know. I still believe that the European tower market is too fragmented. It's so evident and clear that the size of the operations makes a big difference in the way that we can act in the different markets. Size gives you more flexibility in what you can do. It can allow you to allocate from one country to another. So it's super important. Being big is very important. But we are already big.
So the good part of the story is that we are the largest in Europe. And whatever happens in Europe should make reference with us. Now, I don't think that 2025 will be the year of large transactions. I would be very surprised.
Next question comes from Luigi Minerva from HSBC. Please go ahead.
Yes. Thank you. Good afternoon. Thanks for taking my questions. The first one is just following up on some press reports at the end of 2024 about data centers in France. I think you also said publicly they are non-core for you. So I was just wondering, yeah, in the context of everything we've discussed for shareholder remuneration, whether you see some progress there towards disposals. And secondly, if I may try a very big picture question, but it's become more topical. We get investors asking this very frequently these days.
It's about the impact of low-orbit satellites like Starlink on towers. So yeah, Marco, if you can share your view, it would be helpful. Thank you.
Thank you. Well, on data center, on French data center, my point is the following. We are subscaled, and in order to become a real player in data center in whatever country in Europe, the quantity of CapEx that would be needed, and most importantly, the know-how that is requested to become a real data center player is not in our capacity. Okay? So on the other hand, the status quo of those data centers is that they are making stable and reliable EBITDA. We have a stronger relation with the client, which is Bouygues, which is one of our best clients of the group. The relation with the client is very good, and the quality we're delivering is very much okay.
I confirm you that I consider these as a non-core activity than if you ask me if I'm losing money, if I'm desperate because I don't know what. No, the answer is no. We made very clear that we can be open-minded vis-à-vis this asset, but it's a good asset. We are not here for making special end-of-year sales. It's a good asset. This is the point. We are looking to these now. We're looking to this now. After the closing of Ireland is the next file on our M&A bill. Okay? Good. Satellites. I try not to be too technical, but satellite I see more as a possible cooperation and somehow a possible client than as a real competitor. What is clear, as technologically speaking today, is that low-orbit satellite can provide good quality coverage in remote areas.
In ultra-rural areas, we are talking about areas with less than 20 inhabitants per sq km. No doubt, it works very well. And the technological deployment, the technological improvement they made is transforming also the quality in an acceptably good quality. Then we can argue about the details of the problems, but let me say that it's a. I don't think that will cause the dismantling of existing assets. So if you already have a tower, if you already have a fiber, I don't think that you will dismantle the tower and the fiber because of the satellite. Possibly, you will not build a new one, a new tower or a new fiber, but you will not dismantle it. Is it going to reduce the market potential of Europe very modestly? Because areas with such a low number of inhabitants in Europe is not very common. It's fairly uncommon.
You can argue some part of the inner Spain, some part of the inner France, some part of the inner Poland, but that's it. You don't know. Or some areas of mountains. Yes, okay. Perfect. So I don't see as a critical factor going forward. On the other hand, some of the services that satellite providers require a landing station, require some points of presence on the land. We have 110,000 points on the land, and they have some thousand of points in the space. So I think that if you ask me + and -, I think that the + compensate the -. I don't see this as a real threat for us.
That's very helpful on both points. Thank you so much.
Thank you.
Next question comes from David Guarino from Green Street. Please go ahead.
Thanks. Your point on European tower consolidation, Marco, is pretty clear.
I know you said you're not an M&A buffet, but it's becoming tough to ignore that slide in your earnings presentation showing just that substantial discount appears across the globe. As we kind of think about the different valuation amongst all the towercos, do you think there might be a case for consolidation amongst public towercos? Obviously, the financial merits seem to make sense, but would the strategic merits make sense? Then what role might Cellnex play if that were to occur?
It's a very good point. The cross-border synergies are very modest. If you ask me where is the value creation coming from, the answer is not obvious. Being even bigger can give some synergies on the financial market. The answer possible is yes. You can have a better capital provision.
You can trade efficiently or more efficiently because you increase your volumes, etc. Hard to see that you can make big synergies, big industrial synergies. In Europe, the publicly traded companies are not so many. And honestly, I don't see a real value in combining a publicly traded company in Europe. So I think this is the most important point between public and private. On top of what you said, so the initial trading multiples are very different. On the other hand, never forget that sometimes there are overlaps on some specific countries that make some of the combination quite challenging from the antitrust perspective. Let me make an example. If I have to go together with Vantage Towers, I have a problem in England. I have a problem in Italy. I have a problem in Spain. I have more problems than solutions.
It's hard to believe that we can make something like this. It's quite unlikely. Good point. Last question, Following. Thank you.
Thank you, David. And last question of the session comes from Fernando Abril-Martorell from Alantra. Please go ahead.
Hello. Thank you for taking my questions. Couple, please. First, on colocation growth. So in 2023, you grew by around 3.2% in equivalent POPs. But in 2024, this is down to 2.4% with a softer H2 versus H1. So I understand that Digi's rollout in Portugal is no longer a major driver, probably also Iliad in Italy as well. But I would like to understand what is the underlying demand and growth targets in the coming years in equivalent POPs.
Then, secondly, on expansion CapEx, I appreciated a slight shift from tower CapEx, which I think does lower returns, to efficiency CapEx while keeping the absolute level stable at around EUR 500 million. My question is, how do you see the mix and absolute figure evolving by 2027? Thank you.
Yes. On the drivers to explain the numbers this year, you're right. So between last year and the first part of this year, we had two big contributors. One was the Fastweb branding rollout in Italy, and the other was Digi in Portugal. So these are the two big reasons. Now, I think that going forward, our densification project should be ambitious because it goes to big countries. This is what we are working on.
We are working on increasing the densification in France and increasing densification, continuing working, increasing densification in Italy, and then Poland, which are the three big countries. And this is not very much RAN sharing. It's physical POPs. So physical POPs and equivalent POPs will tend to converge, which has not been the case, for example, for Italy last year, where it was in the vast majority RAN sharing. And so this is what we do expect coming the next years. Sorry, your second part of the question was expansion CapEx. Okay. Yes. You're right. We are trying to keep expansion CapEx in the same ballpark, moving more to efficiency CapEx. But never forget that expansion CapEx for towers, most of the time, are needed for the colocation. So if I needed to make a colocation, I need to reinforce the tower.
And the reinforcement of the tower is a precondition of some colocation. So it's a bit too ambitious to aim to have a physical PoP expansion and not reinforcing the tower. This is something that simply, generally speaking, doesn't work. But you're right. We are going to try to keep in the order of magnitude that we had in the past.
Okay. Thank you very much, Marco.
Thank you. Thank you.
Thank you so much. Now we have reached the end of the session. Thank you so much for your time. And for any additional query or clarification doubt, the IR team is at your full disposal. Thank you so much.
Thanks, everyone.