$900 million
Spark New Zealand today announced the Ontario Teachers’ Pension Plan Board (“Ontario
Teachers’”) will acquire a 70% interest in its TowerCo business.
Spark’s TowerCo business (“TowerCo”) is a leading New Zealand towers business with
approximately 1,263 sites. The transaction values the business at $1.175 billion, representing a
FY23 pro-forma EBITDA multiple of 33.8×1.
Spark expects net cash proceeds2 of $900 million at completion, which is subject to Overseas
Investment Office approval, and is anticipated to occur in the first half of FY23.
Under the terms of the deal, Spark has entered into a 15-year agreement with TowerCo (plus
rights of renewal) to secure access to existing and new towers, with a build commitment of 670
sites over the next 10 years.
Spark New Zealand Chair, Justine Smyth said: “The establishment of TowerCo will accelerate
Spark’s strategic objective of delivering a smart, automated network, while maximising value for
shareholders. The transaction will deliver proceeds of $900 million, enabling direct shareholder
returns and investment in future growth opportunities that will accelerate Spark’s transition from
traditional telecommunications to higher growth digital services.
“Spark intends to release an updated capital management policy at its full year results on August
24. When assessing the most appropriate use of proceeds Spark will consider three key pillars –
maximizing returns to shareholders, investment in future growth, and maintaining financial
flexibility through an appropriate investment grade debt rating. The capital management policy
will provide clarity on the proportion of proceeds allocated to each of these areas and the most
effective means of returning proceeds to shareholders.”
Spark CEO Jolie Hodson said the Company saw a high level of market interest in its passive
mobile assets: “We are pleased to have formed this strategic partnership with Ontario Teachers’
– a high-calibre investor with a long-term partnering focus and significant experience managing a
portfolio of infrastructure investments globally, including within Australia and New Zealand.
“Our intention in establishing TowerCo is twofold – it allows us to deliver better outcomes and
service experience for our customers and Aotearoa through faster, more efficient deployment of
digital infrastructure, and it better realises the value of our passive mobile assets, maximising
value for shareholders and enabling us to invest in future growth opportunities.
“A standalone TowerCo business with sole responsibility for passive mobile infrastructure will
have a single-minded focus, delivering efficiency, service innovation, and improved speed to
market. This is going to be particularly important when you consider the 5G build programs of
tomorrow will be very different to the 4G ones of the past, requiring many more, smaller sites,
closer to the customer, and greater overall densification.”
Bruce Crane, Senior Managing Director and Head of Asia Pacific Infrastructure & Natural
Resources at Ontario Teachers’ said: “The acquisition of a 70% stake in TowerCo is an ideal fit
1 Assumes FY23 EBITDA of NZ$34.8 million as at 30 June 2023.
2 After transaction costs
for our growing global portfolio of high-quality infrastructure assets. This investment builds on our
long track record of investing in superior businesses in New Zealand and will draw on our deep
experience investing in digital infrastructure businesses globally. We look forward to working with
the Spark New Zealand team to build and grow a leading business that will enable New
Zealanders’ continued access to critical telecommunications services to meet their growing
mobile demand needs over the long-term.”
Spark will continue to determine how its mobile network is developed, including where and when
capacity investments occur, with TowerCo then designing and deploying these build
programmes.
Jolie continued: “As part of the deal, we have committed a substantial build programme to
TowerCo, with 670 sites to be built over the next decade. This is a significant investment in the
digital infrastructure that will underpin the growth of our digital economy and enable businesses
in Aotearoa to innovate and grow.
“Spark is the anchor tenant and retains a 30% stake in TowerCo, ensuring we are a key strategic
partner as the business grows. We will also continue to own all the ‘smarts’ of our network – such
as radio equipment and spectrum – which is what drives our competitive advantage and
differentiation in the market.”
Authorised by:
Alastair White
GM Capital Markets
==============================================================
i hold SPK
Be the first to comment