Telco to pocket $1.7b from towers
Vodafone will sell its mobile towers for $1.7 billion, provided the Overseas Investment Office gives approval.
The deal would form a new company, TowerCo, which would hold 1484 mobile towers making it the country’s largest operator, covering more than 98% of New Zealand’s population.
Under the terms of the deal, which is subject to Overseas Investment Office approval and completion of certain reorganisation steps, the new TowerCo will enter into a 20-year master services agreement with Vodafone NZ providing Vodafone with access to both existing and new towers, and a commitment from TowerCo to build at least 390 additional sites over the next 10 years to enhance Vodafone’s relative coverage and capacity position.
Vodafone New Zealand, which is owned by Infratiland Brookfield Asset Management, announced the sale on the NZX yesterday morning.
The mobile towers will be sold to funds managed or advised by global investors
InfraRed Capital Partners and Northleaf Capital Partners.
Both will hold a 40% share of the new company, with Infratil to reinvest and hold 20% of the new company.
Vodafone would continue to operate parts of its network, including radio access equipment and spectrum assets.
Infratil and Vodafone announced on March 7 it was going out to the market over the potential sale of Vodafone’s passive mobile towers. The transaction is expected to complete in the fourth quarter of the 2022 calendar year, provided it gets Overseas Investment Office approval.
Vodafone sold Vodafone NZ to Kiwi company Infratil and Canadian firm Brookfield Asset Management for $3.4b in May 2019.
The sale includes all of Vodafone’s towers, except those it owns under the Rural Connectivity Group –a company jointly owned by New Zealand’s three mobile network operators – 2degrees, Spark and Vodafone.
While the towers themselves will be owned by TowerCo, the active devices on them (including the antenna and cables, power equipment and radio equipment) will not be sold.
The new owners
InfraRed is a global investment manager focused on infrastructure and real estate, with offices in London, New York, Sydney, and Seoul.
Northleaf is a global private investment firm headquartered in Canada, with offices across North America, and in London, and Melbourne.
In its announcement to the NZX, Infratil said the move would allow for specialised ownership of the passive mobile towers, driving efficiency, which would prove important as demand for data and connectivity increase.
While Vodafone would divest a large chunk of its assets, the deal would increase earnings before interest, taxes, depreciation and amortisation by almost 34 times.
Infratil chief executive Jason Boyes said Vodafone was an excellent Infratil investment.
‘‘We have unlocked a significant portion of the value of our original equity invested in Vodafone, whilst retaining that investment and a 20% stake in TowerCo.’’
Brookfield Infrastructure managing director Udhay Mathialagan said the partnership would enhance site choices for wireless operators in New Zealand.