Ontario Teachers buys Spark TowerCo majority share

Ontario Teachers buy majority share of Spark’s TowerCo

Ontario Teachers’ Pension Plan Board will pay Spark $900 million for a 70 percent majority stake in TowerCo, the telco’s mobile tower business.

The deal covers more than 1250 mobile phone towers around New Zealand and values the entire network at around $1.3 billion.

Spark says the deal will complete in the first half of the 2023 financial year and is subject to Overseas Investment Office approval.

TowerCo has a 15-year agreement with Spark to provide access to the existing towers and any new ones. The agreement includes a commitment to build a further 670 sites over the next decade.

Vodafone tower sale imminent

Ontario Teachers is part of a consortium aiming to bid for Vodafone New Zealand’s tower network along with the New Zealand Superannuation Fund. The Canadian pension fund missed out on an earlier auction for the Optus tower network in Australia and looked to New Zealand.

Bids for the Vodafone tower network are due today, July 15.

Telcos around the world have cashed in on their tower networks in recent years. In many cases sales have unlocked billions in capital that can be recycled into potentially high-return business opportunities. Others have done it to reduce the debts incurred building 5G networks.

In Spark’s case a proportion of the proceeds will be invested. Spark’s chair Justine Smyth says this will help the business accelerate its transition from traditional telecommunications into higher growth digital services.

A proportion of the money will be earmarked for shareholders. Smyth says the money will enable direct shareholder returns.

She says: “Spark intends to release an updated capital management policy at its full year results on August 24. When assessing the most appropriate use of proceeds Spark will consider three key pillars – maximising returns to shareholders, investment in future growth, and maintaining financial flexibility through an appropriate investment grade debt rating.

Shareholder returns

“The capital management policy will provide clarity on the proportion of proceeds allocated to each of these areas and the most effective means of returning proceeds to shareholders.”

Tower sales are based on the idea that the mobile phone networks are no long important differentiators for carriers.

In the early days of mobile networks towers were strategic assets allowing carriers to compete. Now that mobile networks cover all the main population areas in New Zealand and in rural areas the networks rely on the shared assets of the Rural Connectivity Group, they say there’s less advantage to owning the towers.

Yet that’s not the thinking at 2degrees where CEO Mark Callander says there are no immediate plans to sell towers.

2degrees expands 5G footprint

2degrees says it added 13 5G areas to its network in June. Chief technology officer Martin Sharrock says the company’s focus has been to create contiguous zones of coverage in preference to building coverage in spots. He says this means a mobile customer stays on 5G for longer, not moving in and out of coverage.

The network build includes Milford and Belmont on Auckland’s North Shore. Albert Street, Ellerslie, Wairakei, Adelaide Road, Hyde Park, Remuera Road, Broomfield, Hobson Bay South, Kohimarama, South Waimairi and Mt Wellington North.

Elsewhere Sharrock says the company is seeing more customers roaming overseas, a sign that International travel is returning.

He says: “Pre-pandemic we would see tens of thousands of people roaming in a month. This dropped to almost zero during 2020 and 2021, but has been steadily increasing this year, and is now sitting at 20 percent of the pre-Covid peak.” Inbound roaming – returning Kiwis and Australian travellers – is also up, peaking above the levels seen during the last trans-Tasman bubble.

Chorus sees modest rise in fibre uptake

In its quarterly report to shareholders Chorus said the company added 20,000 fibre connections in the fourth quarter of its 2022 financial year. The lift takes the total number of fibre connections to 959,000 or 69 percent. Uptake in UFB1 areas is now 74 percent, in Auckland the uptake is 79 percent.

Almost one-third (30 percent) of the new connections took a 1Gbps plan. Gigabit plans remain at around 23 percent of total residential connections while there are now around a thousand Hyperfibre connections.

Chorus logged a slight reduction in the monthly average data use per connection. This now sits at 508GB across all users and at 567GB for fibre users. The company says the decline is most likely a result of more workers returning to their offices.

Ministry to fund rural IoT network

The Ministry For Primary Industries says it will invest $149,500 to help fund the commercial roll-out of a rural focused LoRaWAN or Long Range Wide Area Network. The money comes from MPI’s Sustainable Food and Fibre Futures fund and will to Wispa Network Limited.

New Zealand has a number of IoT networks, but Wispa Network Limited says the existing networks focus on urban areas, it plans to concentrate on rural connections.

Regional IoT spend to hit A$24 billion in four years

IDC forecasts Australian and New Zealand businesses will spend A$16 billion on IoT products and services in 2022. That is set to rise to A$24 billion in 2026. The research company says there are challenges: rising inflation, chip shortages and supply chain issues among others.

“The role of IoT continues to grow as enterprises embrace digital initiatives and look to embed intelligence across processes and applications. Enabling this requires building bridges between operational technology and IT stakeholders at multiple levels,” says Hugh Ujhazy, IDC’s VP of Telecom & IoT in APEJ.

In other news…

On Wednesday Australia’s ANZ Bank confirmed its plans to buy MYOB from private equity firm KKR in a deal that could reach more than A$4.5 billion. Australian news reports suggest the deal could be complete by today (July 15). Buying the small business accounting company would give the ANZ access to sensitive company data but would also allow integration between banking and accounting – something that appeals to many small business owners.

A report in The Guardian looks at oVRrcome,a New Zealand developed virtual reality phone app, that can help people deal with phobias.

Netflix is set to partner with Microsoft as it builds an advertising-supported streaming service. While the company has suggested this could lead to a lower-cost option for customers, there are fears the company will lift charges for its ad-free option.

Deutsche Telekom sold a 51 percent stake in its tower business for US$6.6 billion to a consortium including Brookfield Infrastructure Partners.