(Bloomberg) — Spark New Zealand Ltd. is selling a majority stake in its mobile-phone tower assets to Canadian pension fund Ontario Teachers’ Pension Plan Board in a NZ$900 million ($550 million) deal.
The fund, which invests globally to deliver retirement income for current and retired teachers in Ontario, will acquire 70% of Spark’s TowerCo business, the Auckland-based telecommunications company said Tuesday.
The transaction, which is subject to New Zealand Overseas Investment Office approval, values TowerCo at NZ$1.18 billion and Spark expects net cash proceeds of NZ$900 million. Completion is anticipated in the first half of the 2023 financial year.
The proceeds will enable “direct shareholder returns and investment in future growth opportunities that will accelerate Spark’s transition from traditional telecommunications to higher growth digital services,” Spark Chair Justine Smyth said in a statement. The company intends to release an updated capital management policy at its full-year results on Aug. 24, she said.
Spark shares rose 1.3% to NZ$4.96 at 11:07 a.m. in Wellington.
Telecommunications companies around the world are separating so-called passive assets such as mobile-phone towers and looking for specialist investors. Spark competitor Vodafone New Zealand is also seeking buyers for its wireless phone towers, while Australia’s Telstra Corp. last year raised capital from the sale of a stake in its towers and planned to return some of that to shareholders.
Spark said that under the terms of the deal with Ontario Teachers’, it has entered into a 15-year agreement with TowerCo, plus rights of renewal, to secure access to existing and new towers, with a build commitment of 670 sites over the next 10 years.
Spark will continue to determine how its mobile network is developed, including where and when capacity investments occur, with TowerCo then designing and deploying these build programs.
When assessing the most appropriate use of the proceeds, Spark said it will consider three key pillars — maximizing returns to shareholders, investment in future growth and maintaining financial flexibility through an appropriate investment grade debt rating. The updated capital management policy will provide clarity on the proportion of proceeds allocated to each of these areas.
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