Australia’s Telstra to sell 49% of tower business for $2.1 billion By Reuters

© Reuters. FILE PHOTO: A man and power lines are reflected in a Telstra poster adorning a public telephone in Sydney, Australia, August 13, 2015. REUTERS/David Gray/File Photo

By Arundhati Dutta

(Reuters) – Australian telecom firm Telstra (OTC:) Corp said it will sell a 49% stake in its mobile tower business for A$2.8 billion ($2.1 billion) and return half the sale proceeds to investors, sending its shares to their highest level in over a year.

A consortium of Australia’s sovereign wealth Future Fund and pension funds Commonwealth Superannuation Corp and Sunsuper would buy the stake in InfraCo Towers, Telstra said, in a deal valuing the entire business at A$5.9 billion.

The deal would allow Telstra to focus afresh on its retail business after years of costly competition in infrastructure with its ageing poles and wires pitted against the state-owned broadband network, analysts said.

“It should be positive for TLS and allow it to ramp up their growth in the retail business,” said Mathan Somasundaram, CEO of DeepData Analytics.

“It is an expected divestment but sooner than expected. The new infrastructure entity will have a clean balance sheet and that will allow it to do some big acquisition for growth.”

Telstra shares jumped as much as 5% to A$3.78 after the announcement, their highest since February 2020, while the broader market was up 0.6%.

Telstra has been looking for a buyer for InfraCo, the largest mobile tower infrastructure provider in Australia, since November last year when it split the business from other operations.

Telstra will retain majority ownership and continue to own the active parts of the network, including the radio access equipment and spectrum assets. It has entered into a 15 year agreement with InfraCo to secure ongoing access to existing and new towers.

Telstra Chief Executive Officer Andrew Penn said the details on how 50% of the proceeds would be returned to shareholders would be disclosed at a later date, and flagged a potential buyback with the company’s annual results in August.

The remaining proceeds would be used for debt reduction and enhancing connectivity in regional Australia, Penn said.

Future Fund CEO Raphael Arndt said the investment would strengthen the fund’s exposure to digital infrastructure as Australia increasingly moves towards 5G.

($1 = 1.3312 Australian dollars)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button