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New Zealand's Spark getting in on tower selling craze

Telco to explore ways to sell off a portion of its tower business after posting a set of rosy results.
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Written by Chris Duckett on
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Image: Spark

New Zealand telco Spark has announced it will shift its passive mobile tower assets into a TowerCo subsidiary and explore ways to get a capital injection into the new entity in the second half of the year.

The company expects the separation will increase tower tenancy and lower costs as it expands coverage across Aotearoa. TowerCo will have around 1,500 sites transferred to it, of which 70% are towers and the remaining 30% are split evenly between assets mounted on buildings and light poles. Spark said 53% of the sites are urban, while 15% are regional, and 32% are classified as rural.

"We can see globally that shared ownership models are an effective way of improving returns from infrastructure assets that are not critical to competitive advantage. In mobile, our active assets are what drives our competitiveness – including our core network and radio equipment," Spark chair Justine Smyth said.

"Should we choose to introduce third-party capital we will retain a shareholding and remain a key anchor tenant, with appropriate agreements in place on arms-length terms for operations and services. There will be no change for our customers, and we will continue to invest in modernising our mobile network and improving coverage for Aotearoa."

The move mirrors those from across the ditch where Telstra received AU$2.8 billion for a 49% stake in its tower business and Singtel sold a 70% stake in its Australian tower business for AU$1.9 billion.

Spark's announcement was detailed in its first-half results which saw it post increases across the board. Revenue was up 5.2% to NZ$1.9 billion, earnings before finance income and expense, income tax, depreciation, amortisation and net investment income increased 7.6% to NZ$500 million, and net profit increased 22% to NZ$147 million.

Broken down by segment, mobile saw its revenue increase 7.4% to NZ$437 million and connections rose 0.6% to 2,445,000. Voice revenue fell by 1.1% to NZ$86 million as connections dropped 21% to 229,000, and cloud, security, and service management revenue dropped 1.7% to NZ$176 million.

Elsewhere in New Zealand, the Commerce Commission said it was looking for feedback on its Measuring Broadband New Zealand program.

"Capturing new technologies like 5G and satellite broadband, including smaller providers and plans, and measuring in-home Wi-Fi performance will provide a richer source of information for consumers," Telecommunications Commissioner Tristan Gilbertson said.

Submissions close on March 16.

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