UPDATE 2-Spain's Cellnex to buy Arqiva's telecoms division in $2.5 bln deal

* Spanish company Cellnex buys UK phone mast business

* Cellnex has firepower for more deals

* Arqiva to focus on broadcast infrastructure business (Adds detail, Arqiva statement)

MADRID, Oct 8 (Reuters) - Cellnex has agreed to buy the telecoms division of Britain's Arqiva for 2 billion pounds ($2.5 billion), expanding the Spanish company's phone tower network to more than 50,000 sites across Europe.

The wireless infrastructure company whose shares rose 3% in morning trade to hit a record high, said it would launch a rights issue worth 2.5 billion euro ($2.75 billion) in part to fund the deal.

The transaction gives it about 7,400 owned sites and the rights to market about 900 additional sites across Britain.

Cellnex has snapped up tens of thousands of phone tower sites in Europe in the past three years, making the Barcelona-based company a key player in the consolidation of the telecoms infrastructure market.

This deal brings its portfolio to about 53,000 sites in Spain, France, Netherlands, Britain, Italy, Switzerland and Ireland.

Cellnex Chief Executive Tobias Martinez said Arqiva's "strong UK asset-base, revenues and financial profile, combined with its long history at the heart of UK digital infrastructure, make it a perfect addition to our operations".

Arqiva, which ditched plans to list on the London Stock Exchange two years ago, intends to use most of the proceeds to pay down debt.

Chief Executive Simon Beresford-Wylie said in a statement it provided "stability and a focus for our future" and that the company would focus on its broadcast infrastructure business.

He added that a number of Arqiva employees would move to Cellnex, but did not specify how many.

MORE DEALS TO COME?

Credit Suisse analysts said they saw scope for Cellnex to play a bigger role in building new towers in the expanding British market, which had four mobile operators and 4G coverage that was below the European average.

"We see (the) Arqiva portfolio as a good starting point for Cellnex to benefit from this growth," they wrote.

Beyond the Arqiva deal, Cellnex said it was boosting its resources to fund some of the other projects it has lined up, and was still looking for more purchases.

"Our aim is to consolidate and expand our position in the seven countries ... where we are present while still paying attention to projects that might come up in other European markets," Martinez said.

He said he expected growth opportunities linked to the rollout of next-generation 5G infrastructure, deploying fibre-optic cables and small cell technology and placing data processing centres closer to users.

Cellnex expects the business and assets it is acquiring to generate up to about 170 million pounds of annual adjusted EBITDA in 2020.

Cellnex will raise its share capital by issuing 86.7 million shares with an issue price of 28.85 euros per share and a discount to theoretical ex-rights price (TERP) of about 19.58%.

It also plans to fund the acquisition, which is expected to close in the second half of 2020, from a 2 billion pound syndicated loan facility and available cash.

Lazard was sole adviser to Arqiva.

($1 = 0.8145 pounds)

($1 = 0.9107 euros)

(Reporting by Joanna Jonczyk-Gwizdala, Andrés González and Isla Binnie; Editing by Ashifa Kassam, Edmund Blair and Keith Weir)