Well Spark beat us to the TowerCo sales, I thought final bids weren't due until August???
Anyway, OTPP won the contest to purchase 70% for NZ$900m, meaning a valuation of NZ$1.175B on a 100% basis. This equates to a 33.8x EBITDA, for comparison in Australia that ranged from 28x - 35x. All in all an impressive outcome, despite recent media articles suggesting the price aspirations for NZ tower assets were too high a few weeks ago.
Vodafone NZ bids are due this Friday, being the 15th of July and on offer is 80% of the TowerCo. I believe Vodafone will attract a slightly higher multiple due to it having the largest tower portfolio in NZ and covering 98% of the population. Additionally, Vodafone TowerCo generates NZ$51m on the EBITDA line.
Let's assume a slightly higher multiple of 35x (all in NZ$).
$51M * 35 = $1.785B $1.785B * 80% = $1.428B for 80% of TowerCo.
If we assume Vodafone keep say $128-228m for operating purposes/tax, that's still worst case $1.2B in proceeds. My opinion is that it'll be distributed to Infratil and Brookfield at $600m each.
Also, going second isn't the worst as it shows the market where expectations are regarding valuations. Furthermore, infrastructure investors who are keen to secure these types of assets will have to be relentless in their bidding as Vodafone is the last sale I believe in NZ for tower assets.
On another note, recent media reports suggest that RetireAustralia may not be completely sold but rather only a portion. I don't know if I believe this, I think Morrison and Co/Infratil want the cash to accelerate higher generating investments i.e. KAO and Longroad. Speaking of Longroad, has anyone heard anything regarding that minority investor(s) yet?
IFT Price at posting:
$7.06 Sentiment: Buy Disclosure: Held
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