Cell towers on the block
Vodafone and Spark have both revealed plans to sell their networks of cell towers. Both telcos have close to 1500 towers which could unlock a billion dollars or more each.
Spark took the wraps off its plans to establish Spark TowerCo when it announced its half year result in February.
At the time Spark New Zealand Chair Justine Smyth said: “…in the second half Spark intends to establish Spark TowerCo to improve the utilisation and capital efficiency of its passive mobile assets and open up opportunities to introduce third-party capital.”
Spark CEO Jolie Hodson says establishing a TowerCo would “…improve the performance, utilisation, and capital efficiency of its passive mobile assets”.
This week Vodafone announced a similar plan. The company’s part owner Infratil told investors last month plans for a tower spin-off were at an advanced stage.
On Monday Vodafone said it has engaged Barrenjoey and UBS to advise the company on a sale. The company’s press release mentions the possibility of using shared infrastructure.
Analysis: Why telcos are selling mobile towers
New Zealand’s mobile operators are late to the tower sell-off game. Vodafone Australia sold 140 of its towers 14 years ago in 2008. Since then there have been many similar deals around the world.
The logic is straight-forward. In the fibre era, mobile phone towers represent the bulk of a telco’s capital investment.
Towers can account for a large slice of operating costs. Spinning them off and renting them from tower companies and, in some cases, from rival operators or the tower companies set up by rival operators, can cut costs.
More importantly, these deals can boost margins. That looks like delivering better value for shareholders.
The move can be a step on the path to shared infrastructure. This was controversial at one time but the success of the Rural Connectivity Group which builds shared mobile infrastructure for the three mobile companies has removed any fear from not owning towers.
While mobile operators might not want to share wholly-owned infrastructure with rivals, that is not going to worry a tower operator. Indeed, they will woo potential business.
It’s worth mentioning that at an earlier stage in nationwide mobile roll-outs, networks of towers had strategic value to operators. With coverage approaching 100 per cent of commercially viable sites, that’s no longer the case. There is no competitive advantage in owning towers in 2022.
There’s another angle to consider. Over time higher frequency spectrum will become available for 5G networks. Higher frequencies require greater tower density, that means more towers. A lot more towers. Getting that cost off the telco balance sheet and establishing shared infrastructure now will make that a less daunting proposition for mobile company shareholders.
European mobile companies have raised billions of dollars selling their towers. There are plenty of willing buyers with large businesses building up international tower portfolios. It’s an attractive proposition for them because they have guaranteed long term tenants.
TVNZ RNZ merger to complete by next year
Broadcasting and Media Minister Kris Faafoi confirmed the government will move ahead on its plan to merge TVNZ with RNZ. He said the deal will see the two businesses fully merged by the middle of next year.
The deal will see RNZ remain commercial free. TVNZ will stay commercial but would no longer pay a dividend to the government. It appears the merged business will be a not-for-profit operation.
World phone market up 6 per cent in 2021
Gartner says worldwide phone sales grew six per cent in 2021 after falling in 2021. Yet the research company says the numbers would have been better were it not for component shortages and supply chain problems.
Samsung remains top brand with 19 per cent market share. Apple remains in second place head of Xiaomi, Oppo and Vivo in that order. The remaining companies accounted for 32 per cent of all units shipped. Their share continues to fall, last year they represented 40 per cent of the market.
Rival research company IDC has similar numbers for the brands while putting the market increase at 5.7 per cent.
Apple launches low-cost 5G iPhone SE
This year’s iPhone SE includes support for 5G networks. The SE is a smaller size iPhone with a 12 megapixel camera. It costs NZ$800 and will go on sale next Friday, March 18.
…in other news
US Commerce Secretary Gina Raimondo reminded China’s technology companies of the fate dealt out to Huawei. She says they could be in the same boat if they sell to Russia. Raimondo has China’s top chip maker Semiconductor Manufacturing International Corporation (SMIC) in her sights, but it could apply to others attempting to fill the gaps left by western companies.
Dell’Oro Group says the worldwide SD-Wan market grew 35 per cent in 2021 as enterprise customers optimised networks for cloud services. It hit revenues of over US$2 billion. Cisco is the market leader with Fortinet in second place, VMware, Versa and HPE are the other top five brands.
At Reseller News Rob O’Neill reports on boom times for New Zealand’s tech sector. Stats NZ says sales of software and services are up 39 per cent over the last two years.