CommsUpdate: New Zealand operator 2degrees has announced the pending sale of its passive mobile tower assets to Connexa for NZ$1.076 billion ($693.4 million).
Under the terms of the transaction, 2degrees has entered into a 20-year agreement with Connexa (plus rights of renewal) to secure access to existing and new towers, with an additional tower build and co-location commitment of 450 sites over the next ten years.
2degrees will continue to own the active elements of the network, including radio access equipment, spectrum assets, transmission, and transmission and backhaul. Completion of the deal is subject to approvals from the Overseas Investment Office (OIO) and Commerce Commission and is expected in mid-2023.
2degrees focusing on active network layer
2degrees CEO Mark Callander claimed the sale of its 1,124 towers would enable the company to focus on its core business and increase investment in 5G deployment.
“The network we have built is phenomenal, but towers and real estate is not where we innovate. What we do with the active network layer is key and will continue to be the focus of future investment – this is where we will differentiate and grow,” he said.
Mobile network operator (MNO) 2degrees and Vocus New Zealand merged under the 2degrees brand earlier this year to form the country’s third largest full-service telecoms provider.
Connexa was formed following the sale of a 70% stake in Spark’s tower business to the Ontario Teachers’ Pension Plan Board in July, with the New Zealand operator retaining a 30% holding in the company. The transaction, which completed in October, valued the tower business comprising 1,263 sites at NZ$1.175 billion.
Greater operational efficiencies
Spark will not contribute equity to the acquisition, resulting in its shareholding in Connexa being diluted from 30% to approximately 17% (of the resulting larger business) following completion of the acquisition.
Ontario Teachers’ will provide funding for the deal and its shareholding will increase to approximately 83%.
In a press release confirming the deal, Connexa chief executive Rob Berrill said the addition of 2degrees’ mobile towers would provide opportunities for greater operational efficiencies through increased infrastructure sharing.
As previously reported by TeleGeography’s CommsUpdate, Vodafone New Zealand completed the NZ$1.7 billion sale of 1,484 mobile towers to a group of investment funds in early November.