Vodafone $1.7b passive mobile tower sale to InfraRed and Northleaf

Vodafone New Zealand, with its shareholders Infratil Limited and Brookfield Asset Management, has announced the sale of its passive mobile tower assets for $1.7 billion to global investors InfraRed Capital Partners and Northleaf Capital Partners.

Both companies will hold 40% of the assets each, with Infratil reinvesting to hold the remaining 20% in the new TowerCo.

Vodafone says the new TowerCo business has 1,484 wholly-owned mobile towers and will be the largest New Zealand towers business, covering over 98% of New Zealand's population.

Under the terms of the deal, which is subject to Overseas Investment Office approval, the new TowerCo will enter into a 20-year master services agreement with Vodafone NZ (with extension rights).

This provides Vodafone with access to both existing and new towers and a commitment from TowerCo to build at least 390 additional sites over the next ten years to enhance Vodafone's relative coverage and capacity position.

Vodafone says it will continue to own the active parts of its network, including the radio access equipment and spectrum assets, maintaining an industry-leading mobile coverage and network position.

The telecommunications company says the new TowerCo structure allows for separate and specialised ownership of the passive mobile towers, providing strong incentives to drive better capital efficiency, including increased co-location of equipment on common tower assets.

It says this is essential as demand for data and connectivity continues to grow year on year, driving the importance of more intensified digital infrastructure to meet community needs.

Infratil Chief Executive Jason Boyes says he's delighted with the outcome.

"We have unlocked a significant portion of the value of our original equity invested in Vodafone, whilst retaining that investment and a 20% stake in TowerCo," he says.

"InfraRed Capital Partners and Northleaf Capital are high-calibre investors who share our vision for what the new TowerCo can deliver across New Zealand. The transaction is a win-win for Infratil shareholders.

Brookfield Infrastructure Managing Director Udhay Mathialagan says this transaction is a material milestone in executing its strategic program to increase the use of assets at Vodafone NZ.

"Releasing capital from the network when it makes sense and conditions are supportive and through targeted partnerships around infrastructure," he says.

"This partnership will enhance site choices for wireless operators in New Zealand whilst supporting a strong return on our equity invested in Vodafone NZ three years ago.

Vodafone CEO Jason Paris says Infratil, InfraRed Capital Partners and Northleaf Capital are outstanding investors who share the company's vision for Aotearoa New Zealand and will help to accelerate the rollout of critical infrastructure for customers.

"This is a move that will further increase the coverage, capacity and speed of our network for our customers, making our Smart Network even smarter, which was recently awarded number one mobile network in New Zealand by independent benchmarking company Umlaut," he says.

The transaction is expected to complete in the fourth quarter of the 2022 calendar year, subject to receipt of Overseas Investment Office approval.