In July 2022 the New Zealand tower industry underwent a dramatic transformation in the space of just a week. Following announcements from incumbent MNOs Spark and Vodafone NZ back in February that individual processes to find external capital in tower assets were being explored, both MNOs announced their successful buyers hot on the heels of one another.
New Zealand telecom market statistics Q4 2024
The first of the two deals saw “TowerCo”, the tower carve-out of Spark New Zealand, sold to Ontario Teachers’ Pension Plan (OTPP) for US$900mn. OTPP will acquire a controlling 70% interest in the TowerCo business, now called Connexa.
Spark carved out 1,263 sites into its towerco and has retained around 250, and instead concentrating on reinvestment into expanding its data centre portfolio. In line with other transactions across the Tasman Sea in Australia, the transaction valued Spark Towerco at $1.1 billion, for an FY23 Pro Forma EBITDA multiple of 33.8x.
Spark has entered into a fifteen-year agreement with Connexa as anchor tenant and the new independent towerco will have a build commitment of 670 new sites to be completed over the next ten years. Although only tower assets have been sold, under OTPP, Connexa will support New Zealand’s MNOs with a full suite of digital infrastructure services and assets. Now New Zealand’s largest towerco, Connexa acquired ATC New Zealand, trading as Clearspan, in 2024. Clearspan is a land aggregator.
The formation of ForeySouth was led by global asset management firms InfraRed Capital Partners and Northleaf Capital Partners each acquiring 40% of Vodafone New Zealand’s 1,484 towers. Vodafone New Zealand is owned by Brookfield and Infratil rather than its UK based namesake, with Infratil planning to reinvest proceeds from the sale to acquire the final 20% of the business.
A small number of sites are owned by a consortium rolling out rural sites in the large but lightly populated country. Vodafone New Zealand will enter into a 20 year agreement with the new towerco to maintain access to the towers, and the deal also includes an additional 390 sites to be rolled out over the same 10 year period as Spark.
New Zealand estimated tower ownership – Q4 2024
In a strikingly similar deal, the transaction and has raised US$1.1 billion for Vodafone New Zealand, for an FY23 pro-forma EBITDA multiple of an identical 33.8x. Completion of the transaction is subject to Overseas Investment Office approval.
Exceeding Spark TowerCo’s site count, the new towerco will be the largest independent owner of tower assets in New Zealand, and will cover 98% of the country.
InfraRed Capital Partners is an international infrastructure investment manager with over US$12bn of equity capital in multiple private and listed funds. The acquisition marks InfraRed’s third investment in New Zealand, and its first globally in telecom towers.
Northleaf Capital Partners is a global private markets investment firm with over US$20 billion in private equity, private credit and infrastructure commitments. Northleaf has been an active investor in Australia and New Zealand infrastructure projects since 2013, but again this marks the first move into telecom towers for the Canadian based fund.
In December 2022 Connexa completed the set of New Zealand’s tower portfolio sales by buying 1,124 mobile towers from 2Degrees for US$1.08 bn. Under the terms of the deal, 2degrees has entered into a 20 year-agreement with Connexa (plus rights of renewal) to secure access to existing and new towers, with an additional tower build and co-location commitment of 450 sites over the next 10 years.
Fortysouth is New Zealand’s other established towerco, with a site count of 1,590 – around 950 of which are freestanding. It operates in a market where infrastructure is advancing in order to facilitate the country’s exponential growth in data. Towers are being strengthened in order to accommodate 5G and to harness colocation. And with 85% of homes in the country having fibre connection, there is significant data growth being driven by fixed wireless.
There were early signs of a nascent tower industry emerging in New Zealand, where Spark and Vodafone New Zealand have substantial but ageing tower networks. Newer entrant 2degrees have leveraged co-location where possible and alongside building their own sites have extneded their coverage to around 95% of the country.
2degrees may also have an appetite to sell their towers and partner with a towerco on BTS. Parallel infrastructure is substantial, while the need for improved rural coverage, particularly on the South Island where tourist and agribusiness drive demand, has prompted the government’s Rural Broadband Initiative (run by Crown Infrastructure Partners) to invest in over 100 towers - particularly along transport routes.
CIP have since extended network coverage to over 2,000km of highway and over 170 tourist destinations.
Multinational towerco American Tower’s New Zealand property and land business was exchanged hands to Connexa in an M&A deal in September 2024. Some 112 sites including land under mobile towers and rooftop based mobile sites are now at the hands of the towerco.
A total of just under 4,500 macro-towers are supplemented by around 7,000 rooftop sites, primarily used in the larger cities. In early 2021, Vodafone New Zealand announced a “turbocharged” digital infrastructure investment programme.
The milestone 250th tower was completed as part of this project in June 2021, and was built by the Rural Connectivity Group. The Rural Connectivity Group is a joint venture run by all three of the nation’s MNOs to develop rural connectivity and eliminate mobile blackspots.
The Rural Broadband Initiative has also committed NZD10 million (USD7.06 million) to deploy suitable radio spectrum in more rural areas. It is expected that this will vastly improve broadband capacity and coverage in the long-term, as the 600MHz band is better suited to 5G.
