Tom Pullar-Strecker / Stuff
Vodafone will now seek approval from the Overseas Investment Office for the sale of more than 1000 passive mobile towers.
Vodafone will sell its cell towers for $1.7 billion, subject to approval by the Overseas Investment Office.
The deal would form a new company, TowerCo, which would have 1,484 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 approval from the Overseas Investment Office and the completion of certain reorganization steps, the new TowerCo will enter into a 20-year master service agreement with Vodafone NZ, granting Vodafone 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 improve Vodafone’s relative coverage and capacity position.
Vodafone New Zealand, which is owned by Infratiland Brookfield Asset Management, is announcing the sale on the NZX this morning.
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The mobile towers will be sold to funds managed or advised by global investors InfraRed Capital Partners and Northleaf Capital Partners.
Both will have a 40% stake in the new company, with Infratil reinvesting and keeping 20% of the new company.
If given the green light, TowerCo would enter into a 20-year service agreement with Vodafone, with renewal rights, giving Vodafone access to both existing and new towers.
TowerCo would also commit to building at least 390 additional sites over the next 10 years to increase coverage and capacity.
Vodafone would continue to operate parts of its network, including radio access equipment and spectrum assets.
Infratil and Vodafone announced on March 7 it went to the market about the possible sale of Vodafone’s passive mobile cell towers.
The transaction is expected to close in the fourth quarter of calendar year 2022, subject to approval from the Overseas Investment Office.
Vodafone sold Vodafone NZ to Kiwi company Infratil and Canadian firm Brookfield Asset Management for $3.4 billion in May 2019.
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 in North America, London and Melbourne.
In its announcement to the NZX, Infratil said the move would allow for specialized ownership of the passive mobile towers, boosting efficiency, which would prove important as demand for data and connectivity grows.
While Vodafone would divest much of its assets, the deal would increase earnings before interest, taxes, depreciation and amortization by nearly 34 times.
Infratil CEO Jason Boyes said Vodafone was an excellent Infratil investment.
“We have released a significant portion of the value of our original equity invested in Vodafone, while retaining that investment and a 20% stake in TowerCo.
Brookfield Infrastructure managing director Udhay Mathialagan said the partnership would improve location choices for wireless operators in New Zealand.
Vodafone chief executive Jason Paris said the potential sale of mobile towers sparked a lot of interest.
Morrison & Co’s chief investment officer Will Smales said TowerCo presented an opportunity for Infratil to invest in a hard-to-replicate national tower network with strong partners.
“What makes this an attractive Infratil asset is that while it has long-term, inflation-linked cash flows, it is also a platform with significant growth opportunities, including macro-tower growth, capacity for future co-rent, increased demand for new points or presence and step out of opportunities like small cells.”