HICL Infrastructure to buy interest in passive mobile tower owner in New Zealand – HICL Infrastructure (HICL) has exchanged contracts to acquire a 40% equity interest in Aotearoa Towers, a passive mobile tower infrastructure owner, from Vodafone New Zealand. Following completion of the transaction, TowerCo will represent approximately 7% of HICL’s portfolio by value, and is expected to take HICL’s portfolio weighting in digital communications infrastructure to about 9%.
The transaction will create New Zealand’s largest independent tower company, with 1,484 wholly owned towers covering 98% of New Zealand’s population. TowerCo will own and operate the passive tower infrastructure while Vodafone NZ will retain responsibility for the ‘active’ telecommunications equipment mounted on the towers.
TowerCo will benefit from a long-term, availability-based revenue contract with Vodafone NZ, that is indexed to inflation. The initial term of the agreement is 20 years with the option of two 10-year extensions. The agreement will grant Vodafone NZ access to the passive tower infrastructure in exchange for contractual, inflation-linked access charge payments that are unrelated to usage, and will account for 96% of TowerCo’s day-1 revenues. Vodafone NZ has contractually committed to additional sites over the next ten years which will increase TowerCo’s asset base and revenues over this period.
TowerCo’s cashflows are underpinned by a long-term contract with a strong corporate counterparty and it benefits from an entrenched market position with high barriers to entry. The transaction is expected to be accretive to several of HICL’s key portfolio metrics, particularly asset life due to the perpetual nature of the asset, and inflation correlation, which is materially in excess of HICL’s portfolio average.
HICL’s investment is being made alongside Northleaf Capital Partners, which is also indirectly acquiring a 40% equity interest in TowerCo. Completion is subject to Overseas Investment Office approval and is anticipated to occur in the second half of 2022. The investment will be funded from the proceeds of HICL’s recently completed capital raise and existing credit facilities.
HICL : HICL Infrastructure to buy interest in passive mobile tower owner in New Zealand