Low interest rates have fueled a flurry of telco deals and listings in Australia and New Zealand.
In the latest, listed fiber and broadband operator Vocus Group was taken private for A$3.5 billion ($2.6 billion) by asset manager Macquarie Infrastructure and Real Assets (MIRA) and pension fund Aware Super. Vocus has grown by accumulating fiber, ISP and data center assets over the past 13 years. becoming the country's fourth largest telco after its A$2.3 billion merger with M2 in 2015, but it also racked up more than A$1 billion in debt.
In 2019 and 2020, its last full-year result, it reported 4% lower earnings of A$101 million on revenue of A$1.8 billion.
The new owners will likely keep the Australian business intact but have already hired financial advisers, including Goldman Sachs, for an IPO of the New Zealand operation.
Vocus NZ, which is expected to fetch around A$500 million, was preparing for a listing early this year when the sale of its parent was sealed.
Other mid-range ISPs such as Aussie Broadband, the fifth-biggest NBN retailer, and fast-growing Uniti Wireless, have attracted speculation as possible further targets of the MIRA-Aware partnership.
A newly listed telco, Swoop, chaired by Vocus founder James Spencely and one fifth owned by Australia's second richest man, Andrew Forrest, has also been on a shopping spree.
Since raising A$20 million in a May IPO, it's acquired three regional ISPs, completing its A$1.3 million acquisition of Beam Internet this week. Last month it took control of Speedweb for A$1.75 million and Community Communications for an undisclosed amount.
The deal-making is not just a telco thing. There's been a surge in M&A across the economy this year, driven by record-low interest rates, according to Reuters.
The Vocus deal is the largest among the handful that have been completed. Among the bids rejected include A$22 billion for the country's largest airport, A$12 billion for the biggest casino, A$8.8 billion for a building materials firm and A$4.9 billion for a major power utility.
Pass the cap
New Zealand's number three telco 2degrees has stepped into this frothy market with its own bid for a listing. It took its roadshow to Australian fund managers earlier this month to sell the IPO, due late this year or early next and expected to raise up to A$1.5 billion.
The company told prospective investors it has 1.5 million connections, 16% of the postpaid market and achieved ebitda of NZ$163 million ($114 million) in its last full-year result. Its 73% shareholder Toronto-listed Trilogy International, led by industry stalwarts John Stanton, Brad Horwitz and Theresa Gillespie, is expected to still hold a major stake after the listing.
With Vocus NZ also prepping for a debut, 2degrees is betting the market can digest two telco IPOs.
— Robert Clark, contributing editor, special to Light Reading