Vodafone NZ's owners have engaged bankers to manage the possible sale of its 1487 cell towers - a deal that could bring in more than $1 billion if it matches similar deals across the Tasman.
"A market engagement process has now commenced, with Barrenjoey and UBS engaged to advise VodafoneNZ," the telco's external affairs head Rich Llewellyn says.
Vodafone NZ is half-owned by NZX-listed Infratil, and half by Canada's Brookfield Asset Management.
In a February 15 investor day briefing, Infratil told shareholders that things were at "an advanced stage of preparation for potential separation and capital release of passive mobile infrastructure tower assets".
This morning, Llewellyn added the extra detail that 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).
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 $A2.3b.
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.
Based on those deals, pundits across the ditch see Vodafone NZ's tower network fetching between $1b and $2b.
An Infratil investor day presentation showing the breakdown of "active" and "passive" assets associated with a typical cell tower. Only the passive assets would be included in any "TowerCo" deal. Image / Infratil
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).
Spark and 2degrees' plans
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.
This morning, the company confirmed 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 an anticipated $100m deal that would bring in a third-party investor, should it go ahead.
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.
