Singtel owned Optus had announced at the end of 2020 that they were looking to monetise their 2,312 mobile network towers and rooftop sites.
The towers had attracted interest from Brookfield Asset Management, IFM Investors, American Tower, Symphony Consortium (which consists of Stilmark Holdings, Atlantic Tele-Network International and Canadian pension fund OMERS), QIC, Axicom (Australia’s largest independent towerco) and other Australian investors.
Australian pension fund AustralianSuper will buy a 70% stake in ATN (Australian Tower Network – a wholly owned subsidiary of Optus) in a transaction that values ATN at A$2.3bn (US$1.67m). The valuation represents an extraordinarily impressive EV/EBITDA multiple of 38x.
Typically, towercos majority owned by one or a set of operator’s trade at a discount to their independent peers, a factor which contributes to the lower 4.1x and 8.4x EBITDA multiples of China Tower and Indus Towers. (figure 2).
Telstra managed to secure a 28x EBITDA multiple for their towers, which was impressive in and of its self, but Optus’s multiple is closer to that of US publicly listed powerhouse American Tower, which enjoyed a multiple in surplus of 40x.
Optus will maintain their access to the towers through a long-term lease agreement with ATN. They will also serve as anchor tenant on 565 new build-to-suit towers that will be constructed before the end of 2024. These new towers will play a strategic role in Optus’ roll out of its 5G network – investment in which is one of the contributing factors to Singtel looking to monetise the towers.
Singtel will continue to hold a 30% stake in ATN. In a press release Singtel stated that this provided them with “options for growth given the potential to increase the number of tenants on the existing towers.”
Additional tenants would come in the form of Australia’s other two MNOs – market leader Telstra and TPG Telecom – a recently formed operator born out of a merger between Vodafone Hutchison Australia and TPG Telecoms Limited – the latter having had a limited presence in the mobile market.
Singtel CEO Yuen Kuan Moon also commented in the press release that “This transaction also supports our larger infrastructure strategy to unlock value through an asset-right approach which will free up capital to reallocate and reinvest in key growth areas.”
Singtel simultaneously announced they were starting a regional data centre business with Thailand’s Gulf Energy and Telkom Indonesia.
The deal no doubt cements Australia as one of the hottest tower markets right now, and more headline could yet to be made this year with TPG Telecom also looking to monetise their towers, and notable international firms keeping a close eye on the country.
Estimated tower ownership in Australia Q321
