A Vodafone NZ tower at Western Springs being upgraded for 5G in November 2019. Photo / File
A Vodafone NZ tower at Western Springs being upgraded for 5G in November 2019. Photo / File
Vodafone NZ has sold its 1484-site cell tower network to London-based InfraRed Capital Partners, Toronto's Northleaf Capital Partners and one of its corporate parents, Infratil, in a deal worth a total $1.7 billion.
It follows Spark's $900 million sale of 70 per cent of its cell towers (or 1263 sites)to the Ontario Teachers' Pension Plan Board last week.
Vodafone NZ's deal valued its cell towers at an average $1.15m each, or $916,000 if you discount for Infratil's 20 per cent reinvestment.
Spark's deal valued its towers at $930,000 each, with the telco realising $651,000 per tower through its 70 per cent sale.
Forsyth Barr's Aaron Ibbotson was unimpressed by a Vodafone insider's "our price-per-tower-was-better-than-yours" line, however.
"The ebitda multiple [33.8x] is the same, so presumably they just have higher lease payments," he told the Herald (neither Spark nor Vodafone has revealed what they'll pay to access their towers).
Jarden analyst Neville Gluyas said proceeds from the sale would effectively wipe VodafoneNZ 's external debt - currently sitting at $1.34b - and leave about $320m in net cash.
Infratil shares were up 1.5 per cent to $8.10 in early trading, outpacing the NZX50's 0.56 per cent rise. The stock is up 5.59 per cent for the year.
The sale was announced this morning by NZX-listed Infratil, which owns 49.95 per cent of Vodafone NZ. Canada's Brookfield Asset Management also has a 49.95 per cent stake, with the balance held by Vodafone NZ CEO Jason Paris (0.3 per cent) and other managers.
As part of the sale, Infratil will re-invest to hold a 20 per cent stake in the new "TowerCo" that will run the cell towers, while InfraRed and Northleaf will each have a 40 per cent share.
Like Spark, Vodafone NZ sold the "passive assets" in its cell tower network, and will keep control of its electronics and spectrum. As part of the deal, Vodafone NZ gets 20 years' access to the sites and TowerCo will build at least 390 new sites over the next 10 years to increase reach and capacity.
And like the Spark deal, it is subject to Overseas Investment Office approval. Infratil expects it to wrap up in the fourth calendar quarter of this year.
"This is a move that will further increase the coverage, capacity and speed of our network for our customers," Paris said.
An NZX filing said, "No incentive fees are payable to Infratil's manager Morrison & Co in relation to the investments in Vodafone NZ or Aotearoa Towers Group LP."
According to an investor briefing - confirmed by Vodafone NZ - TowerCo is forecast to have operating earnings of $51m for the 2023 financial year.
A Vodafone NZ spokesman told the Herald that today's deal only includes the telco's wholly-owned towers. It excludes 311 cell towers built for the public-private Rural Broadband Initiative by the Rural Connectivity Group (a joint venture between Spark, Vodafone NZ and 2degrees).
In May, Infratil reported a record full-year profit of $1.2b, driven by the sale of Tilt Renewables.
Vodafone's ebitdaf rose 15.7 per cent to $518.0m on revenue which increased 0.7 per cent to $1.97b.
The telco's operating earnings were forecast to rise 5 per cent in FY2023, in part through cost controls and efficiencies and the easing of border restrictions - which is expected to boost roaming revenue.
Morrison & Co adds to cell tower deals
The NZ Super Fund (which did not comment) was rumoured to be interested in both Spark and Vodafone NZ's tower sales.
Spark and Vodafone NZ's deals were inspired by lucrative asset sales across the Tasman.
In October 2021, Optus sold a 70 per cent stake of its fully owned cell tower subsidiary to AustralianSuper (the new co-owner of Vocus) in a A$1.9b ($1.92b) deal that valued the 2312-site network at A$2.3b.
And in June last year, Telstra sold 49 per cent of its telecommunications towers business, InfraCo Towers - which has around 5570 sites - to a consortium of super funds for A$2.8b. The consortium was led by Morrison & Co.
Based on those deals, pundits had expected Vodafone NZ's tower network to fetch between $1b and $2b - meaning it has come in at the higher end of expectations.
New 2degrees CEO Mark Callander says his firm - recently merged with Orcon Group - has no plans to sell its cell tower network.
