Spark New Zealand has revealed that it sold 70 percent of its interests in its mobile phone tower business to the Ontario Teachers' Pension Plan Board.
TowerCo has around 1263 sites in Aotearoa and is valued at around $1.175 billion.
According to the company, it expects to earn $900 million in cash from the deal when it completes. It will require approval from the Overseas Investment Office for that to happen, which is expected to happen in the first half of 2023.
Spark has also entered into a 15-year agreement with TowerCo to secure access to existing and new cell towers, including the rights to renew the deal.
"The establishment of TowerCo will accelerate Spark's strategic objective of delivering a smart, automated network, while maximising value for shareholders," said Justine Smyth, Spark New Zealand chair.
"The transaction will deliver proceeds of $900 million, enabling direct shareholder returns and investment in future growth opportunities that will accelerate Spark's transition from traditional telecommunications to higher growth digital services."
Spark CEO Jolie Hodson said the company saw a high level of market interest in its passive mobile assets.
"We are pleased to have formed this strategic partnership with Ontario Teachers' - a high-calibre investor with a long-term partnering focus and significant experience managing a portfolio of infrastructure investments globally, including within Australia and New Zealand.
"It allows us to deliver better outcomes and service experience for our customers and Aotearoa through faster, more efficient deployment of digital infrastructure, and it better realises the value of our passive mobile assets."
Hodson said the standalone business will have a single-minded focus, allowing efficiency, innovation and improved speed to market.
"This is going to be particularly important when you consider the 5G build programs of tomorrow will be very different to the 4G ones of the past, requiring many more, smaller sites, closer to the customer, and greater overall densification," she said.
Spark said it will continue to determine how its mobile network is developed, including where and when capacity investments occur, with TowerCo then designing and deploying these build programmes.
"As part of the deal, we have committed a substantial build programme to TowerCo, with 670 sites to be built over the next decade," Hodson said.
"This is a significant investment in the digital infrastructure that will underpin the growth of our digital economy and enable businesses in Aotearoa to innovate and grow.
"We will also continue to own all the 'smarts' of our network - such as radio equipment and spectrum- which is what drives our competitive advantage and differentiation in the market."
Bruce Crane, senior managing director and head of Asia Pacific infrastructure and natural resources at Ontario Teachers' said the 70 percent stake was an "ideal fit" for its portfolio.
"We look forward to working with the Spark New Zealand team to build and grow a leading business that will enable New Zealanders' continued access to critical telecommunications services to meet their growing mobile demand needs over the long-term."
