Telstra Sells 49% Stake in InfraCo Towers for $2.8 Billion, Focusing on Core Business
Australian telecommunications giant Telstra (ASX: TLS) has announced the sale of a 49% stake in its mobile towers business, InfraCo Towers, for an impressive $2. 8 billion. The stake has been purchased by a consortium of investors led by Future Fund. This strategic move is in line with Telstra's plan to monetise its infrastructure assets and concentrate on its core telecommunications operations.
InfraCo Towers, established as a standalone business within Telstra in 2018 as part of the company's T22 strategy, is the largest mobile tower infrastructure provider in Australia, boasting approximately 8,200 towers. Valued at $5. 9 billion, the deal with the consortium signifies Telstra's commitment to simplifying its operations and unlocking the potential value of its assets.
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The consortium of buyers includes Future Fund, Commonwealth Superannuation Corporation, and Sunsuper, all managed by Morrison & Co. As part of the agreement, the consortium will acquire a 49% stake in InfraCo Towers, while Telstra retains a 51% majority stake and maintains operational control.
Telstra CEO Andy Penn expressed his satisfaction with the transaction, stating that it marks a significant milestone and endorses the company's strategy. Penn explained that Telstra's objective in seeking a strategic partner was to maximise overall value for shareholders, retain control of the assets, and secure Telstra's mobile network leadership and competitive differentiation for the future.
Penn further added, "We are delighted to be forming a long-term strategic partnership with such a high-caliber Australian consortium comprising the Future Fund, Commonwealth Superannuation Corporation, and Sunsuper, managed by Morrison & Co. "
In terms of the financial implications, Telstra plans to allocate approximately 50% of the net proceeds from the sale to shareholders in FY22, potentially through a share buyback. The remaining funds will be utilized to reduce debt and enhance connectivity in regional Australia.
The completion of the transaction is anticipated in the first quarter of FY22, subject to regulatory approvals and customary conditions. Telstra expects to recognize an accounting gain of approximately $1. 4 billion upon completion of the deal, which highlights the substantial value created through the sale of the stake in InfraCo Towers.
Telstra's move to sell a portion of its mobile towers business demonstrates its commitment to streamlining operations and focusing on its core telecommunications services. This strategic partnership with the consortium of investors led by Future Fund positions Telstra for continued growth and enables the company to allocate resources toward improving connectivity and delivering excellent telecommunications services throughout Australia.
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