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Telstra sells 49% stake of InfraCo Towers for A$2.8bn

Andrew Penn.jpg

Telstra has sold a 49% stake in its tower business, Telstra InfraCo Towers, to an Australasian consortium for a net sum of A$2.8 billion.

"This investment further strengthens our exposure to digital infrastructure and the long-term thematic of data growth,” said Dr Raphael Arndt, CEO of the Future Fud.

“We are pleased to partner with Telstra to play an important role in strengthening Australia’s 5G infrastructure.”

The consortium is comprised of the Future Fund, Australia’s sovereign wealth fund, as its largest investor, Sunsuper and the Commonwealth Superannuation Corporation (CSC), and is managed by Morrison & Co, one of the first dedicated infrastructure asset managers.

"We are pleased to have supported the consortium to secure this investment in essential mobile connectivity for local communities across the country,” said Marko Bogoievski, CEO of Morrison & Co.

“Telstra InfraCo Towers should deliver consistent long-term returns for our investors, supported by strong data growth and rising consumer and enterprise demand for mobile capacity and coverage.”

The deal values Telstra InfraCo Towers, which owns approximately 8,200 tower assets including over 5,500 mobile towers, at A$5.9 billion. Under the terms of the transaction, Telstra will retain a 51% stake in the business and has entered into a 15-year agreement with InfraCo Towers to secure continued access to its services.

“Our investment in Telstra InfraCo Towers enables us to provide our customers with high-quality, inflation-linked cash flows and capital growth generated through the provision of essential infrastructure to an increasingly digital economy,” said Alison Tarditi, CIO at CSC.

"This partnership will provide a strong, defensive investment opportunity for our members, in a sector exhibiting positive momentum,” added Michael Weaver, head of private markets at Sunsuper.

With the transaction expected to complete by the third quarter of 2021, Telstra plans to return approximately 50% of net proceeds of the deal to its shareholders in FY22. In addition, the company has announced plans to reinvest A$75 million from the sale proceeds to “further enhance connectivity in regional Australia”.

“We are delighted to be forming a long-term strategic partnership with such high-quality Australian institutions,” said Andrew Penn (pictured), CEO of Telstra.

“The increased commercial focus on Towers since its establishment as a standalone business within Telstra is already delivering efficiencies and we look forward to working with Morrison & Co and the consortium partners to sustain its market leadership over the long term…”

In a separate statement Penn added: “We will be investing A$75 million from the proceeds to further enhance connectivity in regional Australia. We then expect to return 50% of net proceeds to shareholders. The remainder of the proceeds will be used for debt reduction to ensure we maintain balance sheet strength and flexibility.“

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