Telstra has sold a 49 percent stake in its mobile tower infrastructure subsidiary for $2.8 billion to a consortium of the Australian Government Future Fund, Commonwealth Superannuation Corporation and Sunsuper.
The InfraCo Towers business was set up as part of a massive corporate restructure last year, and is home to approximately 8200 telecommunications towers.
Telstra CEO Andy Penn said the telco had brought forward the monetisation of the towers business after receiving an expression of interest from the consortium.
“We had previously intended to commence the process to seek external strategic investment in the towers business in early FY22, with a view to completing any transaction by the end of the 2022 calendar year,” Penn said.
“We were approached by the consortium earlier in the year as they recognised the value of these assets and provided a compelling rationale to progress the transaction ahead of schedule.
“We believe the value of the transaction; the high calibre consortium members and the terms of the agreement which protect Telstra’s network differentiation, support our decision to accelerate the process.”
The price paid for a 49 percent stake values the towers business altogether at $5.9 billion.
Of the $2.8 billion paid by the consortium, Telstra said it would return half of that to shareholders; and invest $75 million “to further enhance connectivity in regional Australia”.
“The remainder of the proceeds will be used for debt reduction to ensure we maintain balance sheet strength and flexibility,” Penn said.
“This level of debt reduction is important to deliver a broadly neutral credit outcome given the long-term Tower access obligations created by the transaction.”
Telstra said that completion of the transaction is expected in the first quarter of FY22.
Penn said the deal meant Telstra retained majority ownership of InfraCo Towers, in addition to its ownership of the active parts of its mobile network, such as radio equipment and spectrum.
Telstra has also entered into a 15 year agreement with InfraCo Towers to secure ongoing access to existing and new towers, with extension options available.
“When we announced a potential monetisation of InfraCo Towers, I was clear that we would preserve
Telstra’s strategic differentiation in mobiles and protect our network leadership,” Penn said.
“I am confident that the partnership and access arrangements we have agreed to will achieve this and are at the core of how we are structuring the business.”
Further details on the return of funds to shareholders, such as how that will take place, are expected to be offered at the telco’s full-year results in August.
Dr Raphael Arndt, CEO of the Future Fund, said in a statement that the investment added to the Fund’s “significant Australian infrastructure portfolio”.
“This investment further strengthens the Future Fund’s exposure to digital infrastructure and the longterm thematic of data growth,” Arndt said.
“We are pleased to partner with Telstra to play an important role in strengthening Australia’s 5G infrastructure.”