Vodafone NZ to sell mobile towers for $1B

It's taken a while, but New Zealand operators have finally joined the tower sale craze, with the two big players both announcing deals in the past week.

Vodafone NZ and its parents, Infratil Ltd and Brookfield Asset Management, unveiled a NZ$1.7 billion (US$1.05 billion) agreement Monday to unload all of its tower assets.

The new owners of what will be New Zealand's largest tower network are InfraRed Capital Partners and Northleaf Capital Partners, who will each own 40%, and Vodafone NZ co-owner Infratil, which will acquire 20%.

Figure 1: The new business comprises 1,484 towers that cover 98% of the population.
(Source: l_martinez/Alamy Stock Photo)

The new business comprises 1,484 towers that cover 98% of the population and is committed to building at least 390 more over the next ten years.

It will provide Vodafone NZ access to the towers for 20 years. Vodafone NZ will continue to own the RAN and spectrum resources.

Vodafone NZ said the new structure provided incentives to improve capital efficiency, including increased co-location of equipment.

“This is essential as demand for data and connectivity continues to grow year on year, driving the importance of more intensified digital infrastructure to meet community needs,” it said in a statement.

Value 'unlocked'

Infratil CEO Jason Boyes said the company had “unlocked a significant portion of the value of our original equity invested in Vodafone, whilst retaining that investment and a 20% stake in TowerCo.”

Infratil and Brookfield each acquired a 49.95% stake in Vodafone NZ from Vodafone Group for a total of NZ$2.1 billion ($1.3 billion) in May 2019 (see Eurobites: Vodafone Pockets $2.3B From New Zealand Sale).

The transaction, which requires the approval of New Zealand's Overseas Investment Office, is expected to be completed in Q4.

It comes on the heels of the sale last week of 70% of rival Spark's tower business to the Ontario Teachers’ Pension Plan (OTTP) for NZ$1.175 billion ($725 million).

Spark will transfer 1,263 towers to OTTP, which has committed to build another 670 over the next ten years, with access to the network guaranteed to the operator for the next 15 years.

Spark said it expects net cash proceeds NZ$900 million ($556 million) at completion, which it expects by Q4.

The two Kiwi transactions are the latest in a flood of tower deals in Asia-Pacific over the past year.

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In the biggest of these, Telstra sold off 49% of its tower business for A$2.8 billion ($1.91 billion) while Singtel-backed ATN and pension fund AustralianSuper bought Axiom for A$3.58 billion ($2.4 billion). (See Asian telcos, investors can't get enough mobile tower deals).

The latest announced sale is PLDT's disposal of half of its tower network for 77 billion pesos ($1.37 billion) in April, while rival Globe Telecom – 21% owned by Singtel – is weighing a deal that could be worth as much as $1.5 billion (see Globe mulls $1.5B tower sale in Philippines – report).

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— Robert Clark, contributing editor, special to Light Reading