CommUpdate: Australia’s TPG Telecom has entered into a binding agreement to sell 100% of its passive mobile tower and rooftop infrastructure to OMERS Infrastructure Management for an enterprise value of A$950 million ($671 million).
TPG said in a press release it expects the transaction will deliver net cash proceeds of approximately A$890 million (i.e. the enterprise value less total transaction costs), with the funds raised expected to be used to repay existing bank debt.
The transaction includes a master services agreement with a 20-year term and an option for TPG Telecom to extend. Included in the deal are 1,237 passive sites, which include 428 mobile towers and 809 rooftop infrastructure elements. TPG notes that this represents approximately 21% of its total mobile network footprint, the remainder of which is already owned and operated by other tower companies.
Meanwhile, the portfolio was also confirmed to include 120 sites in non-metropolitan locations, at which TPG Telecom intends to decommission its active equipment conditional on regulatory approval of multi-operator core network (MOCN) agreement it struck with Telstra earlier this year. Under that deal, which is awaiting regulatory approval, TPG Telecom would gain access to around 3,700 of Telstra’s mobile network assets, while Telstra would gain access to TPG Telecom’s spectrum.
With the transaction subject to customary conditions precedent, including Foreign Investment Review Board approval, TPG Telecom expects to close the deal in the third quarter of its current fiscal year (which ends 30 June 2022).
TPG Telecom CEO and Managing Director, Inaki Berroeta, said the transaction represents competitive long-term financing, which will reduce the company’s total financial leverage and deliver lower borrowing costs
“The tower sale demonstrates the disciplined approach we are taking to asset utilisation and capital allocation as we pursue opportunities to unlock value and maximise our potential for customers and shareholders,” Berroeta said in a statement. “It builds on the landmark MOCN agreement we announced in February of this year to enable regional network sharing with Telstra [subject to regulatory approval].”