Vodafone New Zealand Limited (Vodafone NZ), which is owned by Brookfield Asset Management and Infratil Limited, has agreed to carve-out and sell its 1,484 wholly-owned mobile towers, via the company Aotearoa Towers Limited (TowerCo), for NZ$1.7 billion ($1.05 billion USD) to the InfraRed Capital-managed HICL Infrastructure (40% equity), as well as Northleaf Capital (40% equity).

Additionally, Infratil Limited, an existing shareholder of Vodafone NZ, will reinvest a portion of its proceeds to hold the remaining 20% equity interest in Aotearoa Towers.

Below is a summary of the different parties involved in this transaction:

  • InfraRed Capital Partners: infrastructure private equity firm headquartered in London, UK (LINK)
  • HICL Infrastructure: London-listed (LON: HICL) core infrastructure investment company managed by InfraRed Capital Partners (LINK)
  • Northleaf Capital Partners: mid-market private equity, private credit, and infrastructure investor headquartered in Toronto, Canada (LINK)
  • Vodafone NZ: acquired, in May 2019, by Brookfield Infrastructure with a 49.95% stake and Infratil Limited (LINK) with a 49.95% stake (LINK)
  • HRL Morrison & Co: New Zealand-headquartered infrastructure and private equity investment firm, which is the manager of Infratil (LINK)

Based on Vodafone NZ’s towers generating NZ$50.3 million ($31.1 million USD) of FY2023 pro forma EBITDA (cash basis, not adjusted for IFRS 16), the transaction represents a multiple of 33.8x FY2023 pro forma EBITDA. Additionally, the transaction implies an enterprise value of NZ$1.15 million ($707,500 USD) per tower.

Also, with reference to a recent independent valuation, Infratil expects to have generated a 26.7% IRR on its investment in Vodafone NZ following completion of the transaction. To this end, the transaction is expected to close in Q4 2022.

Finally, Vodafone NZ’s announcement closely follows a similar sale of 1,263 towers by its competitor, Spark New Zealand, for NZ$900 million ($550 million USD).

READ MORE: Ontario Teachers Takes 70% Stake in Spark New Zealand’s Towers

Aotearoa Towers – Vodafone New Zealand

Aotearoa Towers comprises 1,484 wholly-owned mobile towers, making it the largest independent tower company in New Zealand, covering 98%+ of New Zealand’s population. Specifically, Aotearoa Towers will own and operate the passive tower infrastructure (e.g., towers, masts, poles) in New Zealand. While Vodafone NZ will retain responsibility for the active parts of its network, including the radio access equipment mounted on the towers, as well as spectrum assets.

Master Services Agreement (MSA)

Aotearoa Towers will enter into a master services agreement (MSA) with Vodafone NZ with an initial term of 20 years with the option of two 10-year extensions (i.e., 40 years total). The MSA’s contractual access charge payments are inflation-linked and unrelated to usage. Overall, these access charge payments will account for 96% of Aotearoa Towers’ Day-1 revenues.

Through the MSA, Vodafone NZ will have access to both existing and new towers. To this end, Aotearoa Towers has committed to build at least 390 additional tower sites over the next 10 years. In turn, this infrastructure will enhance Vodafone NZ’s coverage and capacity, while increasing Aotearoa Towers’ asset base and revenues.

Transaction Rationale – Vodafone New Zealand, InfraRed / HICL, Northleaf

Below are further insights into the separate rationales for the sale and purchase of Aotearoa Towers by Vodafone NZ (Brookfield and Infratil / Morrison & Co), as well as InfraRed Capital / HICL Infrastructure and Northleaf Capital.

Vodafone NZ

Vodafone NZ’s carve-out and sale of Aotearoa Towers in New Zealand allows the company to optimize its capital structure by reducing debt with the proceeds from the transaction. At the same time, Vodafone NZ can focus on its core strategic objectives, to accelerate the roll-out of active network technology, which will increase the coverage, capacity, and speed of its network for customers.

InfraRed / HICL and Northleaf

Aotearoa Towers’ cash flows are underpinned by a long-term, CPI-linked contract with a strong corporate counterparty in Vodafone NZ. Additionally, the tower company offers value creation opportunities including macro tower growth, capacity for future co-tenancy, increased demand for new points-of-presence (PoPs), and expansion opportunities into adjacent sub-sectors of digital infrastructure, such as small cells.

Transaction Advisors – InfraRed and Northleaf

InfraRed Capital and Northleaf Capital’s financial advisor for the Vodafone New Zealand transaction was Royal Bank of Canada (RBC). Additionally, InfraRed Capital and Northleaf Capital’s legal advisors for the Vodafone New Zealand transaction were Allens and Chapman Tripp.

Also, InfraRed Capital was supported on the acquisition of Aotearoa Towers by Russell Stanners, as a senior adviser. Previously, Stanners was the CEO of Vodafone NZ for 12 years, until 2018.

InfraRed Capital Partners – Overview

InfraRed Capital Partners has its headquarters in London, UK and manages $12bn+ of equity capital in multiple private and listed funds. The firm is 80%-owned by SLC Management, which is the institutional alternatives and asset management business of Sun Life Financial.

InfraRed focuses on value-add infrastructure investing globally, in both greenfield and brownfield assets. Particularly, the firm invests across the social, transportation, and renewable energy infrastructure sectors. Within digital infrastructure, InfraRed Capital and HICL Infrastructure have made investments in:

  • ADTIM: operates an independent wholesale fiber network that provides households in low-density rural areas of the Ardèche and Drôme departments, in southeast France with fiber broadband
  • Complete Technology Group (CTG): UK provider of fiber consulting, planning, audit, and installation services to landlords, which operates via its Complete Fibre division
  • Deutsche GigaNetz: fiber-to-the-home (FTTH) provider in suburban and semi-rural regions of Germany, with its first deployments being in the states of Hesse and Baden-Württemberg
  • LiveOak Fiber: newly formed U.S.-based regional broadband services provider targeting Glynn County, Georgia and Okaloosa County, Florida, with fiber-based broadband internet
  • Public Safety Towers (PSTC): independent tower company in the United States which focuses on servicing commercial data consumption and providing reliable wireless coverage to first responders

Morrison & Co – Overview

Morrison & Co manages multiple client mandates, with a total of over $17 billion of assets under management (AUM). Within digital infrastructure, Morrison & Co manages investments in Kao Data, Vodafone NZ, Fore Freedom, and CDC Data Centres.

In 2021, Morrison & Co, alongside the Future Fund, Commonwealth Superannuation Corporation (CSC), and Sunsuper, acquired a 49% interest in Telstra’s towers business, which is now called Amplitel Towers, at a valuation of A$5.9bn.

READ MORE: Morrison & Co Makes A$3.1bn Offer for Uniti Group in Australia

Most recently, Morrison & Co agreed to acquire FiberLight, which marks the firm’s first investment in North America, within the digital infrastructure sector.

READ MORE: FiberLight Sells for $1bn to Morrison & Co, ART, CalSTRS

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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