Australian pension fund and Singtel buy group of mobile towers for $2.7 billion

A consortium led by Australia’s largest pension group and Singtel has agreed to buy the mobile tower business of investment bank Macquarie for A$3.58 billion (US$2.68 billion), reflecting the growing appetite for funds to acquire infrastructure through private market deals.

AustralianSuper, which manages A$260 billion in assets, and the Singaporean telecommunications group will buy Axicom just six months after the pension fund bought a 70% stake in Australian Tower Network from Singtel. Following the deal, ATN will own around 4,000 towers, which it will be free to lease to any telecom provider, not just Singtel or its Australian subsidiary Optus.

Mobile towers have been cut up and sold to specialist companies and infrastructure funds in recent years as telecom companies come under pressure to shore up their balance sheets and focus investment on 5G and fiber network expansion.

The towers generate cash over a long period and can be operated better under independent ownership than by a telecommunications company by adding equipment from competing companies to the mast, analysts said.

Companies such as Cellnex in Spain and American Tower have built tens of thousands of towers in other markets, while operators such as Telefónica and CK Hutchison have sold their properties.

Other telecommunications companies, including Vodafone and Orange, have created independent companies in an effort to retain control of their towers while increasing their valuation and pursuing deals.

Macquarie has long been an investor in global telecoms infrastructure, buying assets including UK broadcast and telecoms tower company Arqiva in 2007.

Through its investment banking arm Macquarie Capital, it has played a pivotal role in freeing up Australia’s telecommunications tower infrastructure for pension fund investment in recent years.

The bank advised Telstra, Australia’s largest telecommunications company, on the sale of its 49% stake in TowerCo, its own tower network, to a consortium of pension funds last year.

Infrastructure funds have increasingly sought to buy other parts of the telecommunications network, including copper and fiber networks and data centers, as integrated groups in the sector have been broken up.

AustralianSuper’s stake in the company will be 82% and Singtel’s 18%, a pension fund spokesman said.

ATN, which has about 2,000 towers, was previously owned by Singtel through Optus.

Pension fund UniSuper and Swiss financial services company UBS are minority shareholders in Axicom, with Macquarie Asset Management being the lead investor.

Dolores W. Simon