Australian telecommunications giant Telstra Corp has announced officially that it will offload and sell a 49% stake in its mobile tower business for A $ 2.8 billion ($ 2.1 billion).
It said that the company will return a major portion of its money flow from the deal to investors which has surged its share value to the highest level since 2020.
Australia’s largest sovereign wealth Future Fund, pension funds including Commonwealth Superannuation Corp and Sunsuper are going to be the buyers of InfraCo Towers, as per Telstra’s notice to shareholders.
A$5.9 Billion Valuation
The deal has valued the entire telecom business of Telstra at A $ 5.9 billion.
The new deal will further allow Australian firm Telstra to re-focus on its retail businesses operations after years of nail-biting competition in infrastructure with its aging apparatus in competition to the government network, analysts said.
“It should be positive for TLS and allow it to boost their success in retail operations,” said Matthan Somasundaram, chief executive of DeepData Analytics.
“It’s an expected split but sooner than expected. The new infrastructure business will have clean financial statements to begin with and that will allow it to make huge acquisitions to grow.”
Telstra Stock Rises 5%
Telstra shares jumped by over 5% to A $ 3.78 after the announcement. It was the highest level recorded since February 2020. At the time, the wider market was up just by 0.6%.
Telstra has been looking for a buyer for InfraCo, Australia’s largest telecom infrastructure provider, since November last year while it split business from other operations.
How Is The Deal Structured?
Telstra will retain most of the ownership stake in the business and also continue to have operational network facilities, including radio access equipment and spectrum equipment.
It signed a 15-year deal with InfraCo to gain continued access to existing towers and even new ones if they were to come up.
Where Will The Money Be Used?
Telstra Chief Executive Officer Andrew Penn said details on how 50% of the deal value will be re-disbursed to shareholders will be revealed in due course of time and indicated that it is likely to return with the company’s annual results in August.
The remaining money will be used to reduce debt and improve communication networks in the Australian region, Penn said.
Future Fund CEO Raphael Arndt said the investment would strengthen the fund’s exposure to digital infrastructure as Australia moves towards 5G.
