May 9, 2022
Australian MNO TPG Telecom is selling what’s left of its passive mobile tower and rooftop infrastructure inventory to OMERS Infrastructure Management for $950 million.
The deal covers 1,237 existing sites, mainly based in metropolitan areas in Australia, and a ‘committed build-to-suit development program’ of 252 new sites. TPG says the sale will deliver net cash proceeds of approximately $890 million, which is the enterprise value minus transaction costs, which it expects to use to repay debts.
The Transaction includes a master services agreement with a 20-year term and an option for TPG Telecom to extend – which sounds like it’s the same ‘sell off the towers and rent them back’ move we’ve seen from telcos around the world. The 1,237 sites include 428 towers and 809 rooftops, which represents around 21% of TPG Telecom’s total mobile network footprint, with the rest is already owned and operated by other tower companies.
“We are delighted to have concluded the strategic review of these assets with such a strong outcome for TPG Telecom shareholders,” said TPG Telecom CEO and Managing Director, Iñaki Berroeta. “The transaction represents competitive long-term financing, which will reduce our total financial leverage and deliver lower borrowing costs. The tower sale demonstrates the disciplined approach we are taking to asset utilisation and capital allocation as we pursue opportunities to unlock value and maximise our potential for customers and shareholders.
“It builds on the landmark multi-operator core network (MOCN) agreement we announced in February of this year to enable regional network sharing with Telstra (subject to regulatory approval). We are excited to welcome OMERS as a strategic partner and long-term custodian of these mobile network sites. We look forward to working with OMERS to transition the business and then to support its growth as it provides critical telecommunications infrastructure services to our customers and the broader Australian telecommunications sector.’’
Christopher Curtain, Senior Managing Director, Asia-Pacific for OMERS Infrastructure, added: “Australia and Asia-Pacific more broadly are priority markets for OMERS Infrastructure, where we continue to see significant investment opportunities. We are excited to have the investment in TPG’s Tower Assets join our portfolio of high-quality Australian infrastructure investments, alongside Port of Melbourne, Transgrid and renewable energy developer FRV Australia.
“In the transaction, we see an excellent opportunity to realize our digital infrastructure thesis in the region. We look forward to working with the TPG team to first transition the business and then support its growth as it provides critical telecommunications infrastructure services to its customers.”
In February TPG and fellow Australian MNO Telstra signed a ground-breaking ten-year regional Multi-Operator Core Network (MOCN) commercial agreement, which means they agree to share assets and probably paved the way for the deal with OMERS.
It’s interesting to compare the finances of this deal – $950 million for 1237 towers – with the news last month that ATN agreed to acquire Axicom and its 2,000 telco towers for A$3.58 billion. There could be myriad reasons for a differing price between tower asset portfolios of course, but such a significant gap is worth noting.
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