Ontario Teachers’ Pension Plan (OTPP), a Canadian pension fund, today announced that it has agreed to acquire a 70% interest in Spark New Zealand’s mobile towers business, which comprises 1,263 sites, for NZ$900 million ($550 million USD). Spark, a wireless carrier in New Zealand, will be the anchor tenant for a newly formed tower company (TowerCo) and retain a 30% stake in the business.

As part of the deal, Spark New Zealand has entered into a 15-year sale-and-leaseback agreement, including two 10-year extension options, with TowerCo to secure access to existing and new towers. Furthermore, the TowerCo has obtained a commitment to build 670 sites for Spark over the next 10 years.

The Ontario Teachers’ Pension Plan (OTPP) transaction values Spark New Zealand’s towers business, on a whole-company basis, at NZ$1.175 billion ($718 million USD). Based on the TowerCo’s assumed FY23 EBITDA of NZ$34.8 million ($21.3 million USD), OTPP’s valuation represents a FY23 pro forma EBITDA multiple of 33.8x. Additionally, the transaction implies an enterprise value of NZ$930,000 ($568,500 USD) per tower.

Finally, the transaction is expected to close in late 2022 (first-half of Spark’s FY23).

Transaction Details – Spark New Zealand’s Towers

Spark New Zealand expects to generate net cash proceeds, after transaction costs, of NZ$900 million ($550 million USD) at completion. With these proceeds, Spark New Zealand notes the opportunity for “direct shareholder returns” (i.e., dividend or share buyback), as well as capital to invest in “future growth opportunities”, particularly in “digital services”.

Additionally, Spark New Zealand will continue to own all the active infrastructure of its network, such as radio equipment and spectrum, which is what drives the company’s competitive advantage and differentiation in the market.

In terms of 5G, Spark New Zealand states that 5G build-outs will be very different to 4G, “requiring many more, smaller sites, closer to the customer, and greater overall densification”.

Transaction Advisors

Spark New Zealand’s financial advisors were Jarden and Forsyth Barr.

Precedent M&A Transactions

Spark New Zealand’s announcement closely precedes a similar sale of 1,484 towers by its competitor, Vodafone New Zealand, for NZ$1.7 billion ($1.05 billion USD).

READ MORE: Brookfield, Infratil Sell Vodafone New Zealand’s 1,484 Towers

Ontario Teachers’ Pension Plan (OTPP) – Overview

Ontario Teachers’ Pension Plan (OTPP), a Canadian pension fund, is a global investor with net assets of $241.6 billion Canadian dollars ($185 billion USD). The organization invests in asset classes including equities, real estate, infrastructure, and venture growth, to deliver retirement income for 333,000 current and retired teachers in Ontario, Canada.

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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