This article is from the Australian Property Journal archive
TELSTRA has continued the monetisation of its property and infrastructure assets, offloading a 49% interest in its mobile phone towers business to a consortium comprising the Future Fund, Commonwealth Superannuation Corporation and Sunsuper for $2.8 billion.
The transaction values Telstra InfrteaCo Towers at $5.9 billion. The business is the largest mobile tower infrastructure provider in Australia with about 8,200 towers.
Completion of the deal is expected in the first quarter of FY22. Telstra will invest $75 million from the proceeds to enhance connectivity in regional Australia and then return approximately 50% of net proceeds to shareholders in FY22.
Last year, Centuria Industrial REIT acquired Telstra’s data centre complex in south east Melbourne for $416.7 million with a 30-year triple-net leaseback in a record transaction for Australia’s industrial sector.
That was also part of Telstra’s four-year T22 strategy, in which the major telco has embarked on a program to strip costs, realise billions of dollars from its assets, and split its infrastructure assets into separate entities and bring in external investment.
In 2019, Telstra announced the establishment and part sale of the unlisted property trust of 37 properties valued at $1.43 billion, in which Charter Hall took a 49% share. Part of the sell-off included the Edison Exchange building in Brisbane, for $57 million to Singaporean group Firmus Capital.
Telstra will provide details about how it will return the proceeds from the InfraCo Towers deal, including a potential share buy-back in FY22, at its full-year results in August. The remainder of the proceeds will be used for debt reduction.
Telstra chief executive, Andrew Penn said the deal is further endorsement of the T22 strategy, “as the establishment of our infrastructure assets as a separate business was designed to enable us to better realise the value of these assets, take advantage of potential monetisation opportunities and create additional value for shareholders and that is exactly what today’s announcement achieves”.
Penn said Telstra had intended to commence the process of seeking external strategic investment in the Towers business early in the new financial year, with a view to completing any transaction by the end of the 2022 calendar year.
“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.”
Telstra will retain majority ownership of InfraCo Towers and continue to own the active parts of its network, including the radio access equipment and spectrum assets. Telstra has entered into a 15-year agreement, with the option to extend, with InfraCo Towers to secure ongoing access to existing and new towers.
InfraCo Towers will operate under a board, chaired by InfraCo CEO, Brendon Riley and comprising other Telstra and consortium representatives. The CEO will be Jon Lipton, currently head of the towers business within Telstra.
Dr Raphael Arndt, CEO of the Future Fund, said 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 long-term thematic of data growth. We are pleased to partner with Telstra to play an important role in strengthening Australia’s 5G infrastructure,” said Dr Arndt.
