AUS
NZ
UK
CA
USA
IND
Highlights:
- TPG Telecom has inked a binding agreement with Canada-based investor, OMER Infrastructure.
- TPG will be selling its tower assets for AU$950 million.
- TPG Telecom expects to close the deal in the third quarter of 2022.
Australian telecommunication service provider, TPG Telecom Limited (ASX:TPG), has signed a binding agreement with OMER Infrastructure Management Inc. to sell its rooftop infrastructure and passive mobile tower for AU$950 million.
OMER Infrastructure is a Canada based asset manager and investor that holds a resilient and diverse portfolio. Through ASX-announcement, TPG Telecom reportedly said that it expects to use the proceeds to reduce its total financial leverage.
The shares of TPG Telecom were spotted trading at AU$5.54 apiece on the ASX, 0.54% lower than the previous close at 10:32 AM AEST. The shares were performing in line with its benchmark index, ASX 200 Communication Services (XTJ), which was 1.27% down.
Suggested reading: MFG, AMC, HUB: Three best performing shares on ASX 200 last week
About the TPG’s tower asset sales deal
Image source: © Looby | Megapixl.com
According to the binding agreement between TPG Telecom and OMER, 1,237 tower assets will be sold to OMER and a committed build-to-suit growth program of 252 new locations. 1,237 tower assets include 809 rooftops and 428 towers. This represents circa 21% of the company’s mobile network footprint, and the rest is operated or owned by other tower companies. Worth mentioning here is that the agreement does not include the sale of radio access network infrastructure.
The binding agreement includes a 20-years master service agreement under which the telecom can access the network for mobile-related services. The agreement also has the option to extend the master services agreement.
The ASX-listed company expects to generate net cash proceeds of around AU$890 million from the sales transaction. AU$890 million represents the enterprise value after including the transaction costs. TPG Telecom said that it expects to use the cash to pay its bank debts obligation.
Inaki Berroeta, managing director and CEO of TPG Telecom, see the transaction as long-term financing that would assist the company in reducing ‘total financial leverage’ and ‘deliver lower borrowing costs.’
After the completion and audit of accounting treatment, on a preliminary base, the telecommunication services provider expects to record an accounting gain of AU$350 million to AU$400 million after deducting the taxes.
Image Source: © 2022 Kalkine Media ®
TPG Telecom informed the market that it expects to close the transaction in the third quarter of this year, as some approvals are still pending. For instance, the transaction requires a thumbs up from the Foreign Investment Review Board.
Management commentary
Inaki Berroeta commented on the transaction,
Must read: TPG Telecom (ASX:TPG) final dividend up 13% despite lower profit
