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
The first bidders have emerged for Vodafone NZ's cell tower network, which analysts expect to fetch more than $1 billion, based on similar deals across the Tasman.
The NZ Super Fund has teamed up with the Ontario Teachers Pension Fund - which once bought Yellow Pages from Telecom - andare weighing a joint bid, according to an AFR report.
The paper says "there is no shortage of tyre-kickers".
Vodafone NZ and the Super Fund both declined comment.
But on March 7, Vodafone external affairs head Rich Llewellyn told the Herald, "A market engagement process has now commenced, with Barrenjoey and UBS engaged to advise Vodafone NZ."
Vodafone NZ is half-owned by NZX-listed Infratil, and half by Canada's Brookfield Asset Management.
According to an investor briefing - confirmed by Llewellyn - a buyer of "TowerCo" (the placeholder name for a firm running the network of around 1500 cell sites) was projected to make operating earnings of $51 million for the 2023 financial year.
"Vodafone NZ has the largest tower portfolio in New Zealand, covering 98 per cent of NZ's population, with strong co-tenancy potential, currently comprising around 1487 wholly owned mobile towers spread across New Zealand," Llewellyn said.
The buyer would lease the cell sites back to Vodafone for 40 years. There would be 290 new builds under a contracted build-to-sell programme.
Llewellyn said only the "passive" tower assets are up for grabs. "Typically the physical tower, masts and poles, foundations, fencing and access facilities, and any associated contractual rights to occupy the site area."
The deal does not include electronics, spectrum or backhaul (wireless or fibre links from the tower to Vodafone's network).
Image / Infratil investor presentation
The possible sale follows two deals across the Tasman that have made cell site networks hot property.
In October 2021, Optus said it had 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 for A$2.8b. The consortium was led by Morrison & Co, which managers Vodafone NZ half-owner Infratil. But for the Telstra tower deal, Morrison was representing a group of Australian super funds.
Based on those deals, pundits across the ditch see Vodafone NZ's tower network fetching between $1b and $2b.
Infratil has not commented on how proceeds from any TowerCo sale could be spent. One option could simply be paying down debt (Infratil and Brookfield each made a $1b contribution to their $3.4b deal to buy Vodafone NZ in 2019, with the balance coming from debt).
At its half-year result last month, Spark NZ confirmed it was also considering a spin-off of its passive cell tower assets. The telco also has close to 1500 cell sites. Some 1250 have wholly-owned passive infrastructure that would be included in any deal.
The company said Forsyth Barr and Jarden had been engaged to advise on the possible deal.
On the telco's interim results conference call, CFO Stefan Knight said Spark would be looking to retain a stake in "TowerCo" in a deal that would bring in a third-party investor, should it go ahead. Spark but the book value of its celltower network at $100m.
Last week, 2degrees CTO Martin Sharrock told the Herald his company - which has a merger on the table with Orcon Group - has no immediate TowerCo plans.
"Right now, our focus is on our network and the experience we offer for customers, but we are watching this space with interest," Sharrock said.
Shared rural towers excluded
Beyond their own networks, Spark, Vodafone and 2degrees are partners in the Rural Connectivity Group, a joint venture that is constructing several hundred cell towers in remote areas as part of the wider, public-private Rural Broadband Initiative.
Rural Connectivity Group towers would not be part of any TowerCo sale, Llewellyn said.
