Inwit, Fitch confirms “BBB-” rating with stable outlook

Inwit Barclays confirms Overweight and target price at 14 euros

(Finance) – Fitch Ratings has confirmed the Long-Term Foreign-Currency Issuer Default Rating (IDR) of Inwita company listed on Euronext Milan and active in the electronic telecommunications infrastructure sector, to “BBB-“with outlook”stable“.

Inwit’s ratings reflect its strong position in a highly consolidated Italian market of mission-critical passive tower infrastructure for mobile operators, with stable and visible revenues from long-term CPI-linked service contracts. Its strong profitability is supported by an industry-leading high co-location rate and decreased leasing expenses following investments in land ownership.

Fitch expects Inwit to manage its leverage within the target range of 5.0x-5.5x net debt/EBITDA, with significant deleveraging flexibility. This last aspect is driven by a strong pre-dividend cash flow generation based on low capital expenditure and demand-driven new investment projects based on customer withdrawal commitments.

The rating agency expects Inwit to maintain its strong market positions, supported by active construction of new sites. With over 24,000 operational macrosites, Inwit has a market share of over 45%, followed by Cellnexwith over 22,000 sites in Italy at the end of 2023.

The expectation is that Inwit will maintain the pre-dividend fee cash flow (FCF) margin close to 30% in 2024-2027, even with the announced increase in capex. This should allow it to complete its €300 million share buyback in 2024 and increase annual dividends to 7.5% per annum, but also to accumulate additional cash on its balance sheet for distributions to shareholders and to fund new growth opportunities .

Fitch believes that the next changes in the structure of the Italian telecommunications sector they probably will be essentially neutral for Inwit. The reorganization of Telecom Italia it is unlikely to change its heavy dependence on Inwit’s infrastructure for the widespread provision of mobile services. Likewise, the announced acquisition of Vodafone Italia by Swisscom and subsequent joint operations with Italian subsidiary Fastweb are unlikely to result in a significant reduction in revenues for Inwit.