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TPG Telecom to sell tower assets to OMERS for $950m

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TPG Telecom has entered into a binding agreement to sell 100% of its passive mobile tower and rooftop infrastructure (tower assets) to OMERS Infrastructure Management (OMERS) for $950 million.

"We are delighted to have concluded the strategic review of these assets with such a strong outcome for TPG Telecom shareholders. The transaction represents competitive long-term financing, which will reduce our total financial leverage and deliver lower borrowing costs," said Iñaki Berroeta, CEO and managing director, TPG Telecom.

The sum values TPG's tower assets at an enterprise value/EBITDA of 32.1x. Once completed OMERS will onboard roughly 1,237 sites which includes 428 towers and 809 rooftops, in key metropolitan locations and a committed build-to-suit development program of 252 new sites.

The deal is set to deliver net cash proceeds of approximately $890 million, which the TPG Telecom will use to repay existing bank debt.

"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. It builds on the landmark multi-operator core network agreement we announced in February of this year to enable regional network sharing with Telstra," added Berroeta.

The company also anticipates an accounting gain from the sale of roughly $350 million to $400 million after tax, details will be provided in TPG's full-year 22 half-year results due 19 August 2022.

The deal includes a 20-year master services agreement with an option for TPG Telecom to extend. The Transaction is subject to customary conditions precedent including Foreign Investment Review Board approval and, subject to the satisfaction of those conditions, is expected to close in the third quarter of FY22.

"We are excited to welcome OMERS as a strategic partner and long-term custodian of these mobile network sites. We look forward to working with OMERS to transition the business and then to support its growth as it provides critical telecommunications infrastructure services to our customers and the broader Australian telecommunications sector," added Berroeta.

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