In June, Infratil took near full control of One NZ, buying out Brookfield to boost its stake from 49.95 per cent to 99.9 per cent (the balance of shares is owned by One NZ CEO Jason Paris and other executives). The buyout and the valuation rise combined to nearly triple One NZ’s valuation to $3.0b.
One NZ saw operating earnings increase 8.3 per cent to $279.4m, thanks in part to strong performance in mobile, where the average monthly revenue per user jumped from $28 to $38. Infratil said the jump was the result of roaming revenue returning as travel continued its post-lockdown boom, and “annual pricing adjustments”, aka price increases.
Infratil had already upped the valuation of its 48 per cent stake in CDC Data Centres, which in October got a $467m boost to $4.2b.
“CDC is experiencing an unprecedented surge in demand for cloud and generative AI workloads, from both new and existing customers,” Infratil CEO Jason Boyes said this morning.
“This demand has seen CDC embark on an accelerated development plan, bringing forward 223 megawatts of development across Canberra, Sydney, Melbourne, and Auckland.”
The first half also saw Infratil increase its stake in UK data centre operator Kao Data from 40 to 53 per cent and its valuation upped from $256m to $280m.
Another tech investment is still pending. In July, Infratil said it had entered a conditional agreement to take an 80 per cent stake in Hong Kong telco HKT’s Console Connect business for US$160m ($257m). Today, Infratil said the deal was still waiting on regulatory approvals.
Boyes said the period included “the largest equity raise in our history, raising $935 million at $9.20 a share. Pleasingly for shareholders who participated in the equity raise Infratil’s shares have continued to trade strongly following the raise, closing at $10.60 a share yesterday”. Infratil shares edged up from $10.60 to $10.62 as the market opened. The stock is up 23.4 per cent for the year.
Boyes said the company invested more than $2.7b over the past six months, including $1.8b to buy the other half of its One NZ stake. The remaining capital was invested in Infratil’s existing digital and renewable businesses.
Infratil had debt gearing of 19.7 per cent as of September 30, compared with 9.8 per cent at March 31.
Boyes hinted there could be more borrowing to fund acquisitions or expansion. Earlier this week, AFR reported that CDC was in talks to “supersize” its bank debt facilities by upwards of A$1b ($1.08b).
“As we head into a period which is likely to be dominated by a continuation of the macro-economic uncertainty that we are currently experiencing, we are excited about the level of opportunity for continued investment across our existing portfolio,” he said.
“These opportunities are likely to continue to exceed our available capital, allowing us to continue to prioritise the highest value opportunities for shareholders.”
In a research note issued earlier this week - with results at most Infratil investments already known quantities - Forsyth Barr rated Infratil “outperform”, with a 12-month target price of $11.60.
Analysts Aaron Ibbotson and Benjamin Crozier agree with Boyes’ take that the AI boom will continue to lift CDC’s fortunes.
They added: “We believe One NZ has held its mobile market share while Spark has continued to modestly lose share.”
* Earnings before interest, tax, depreciation, amortisation, fair value movements
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
