2degrees sells mobile phone towers in $1.08b deal

Telecommunications company 2degrees has sold its mobile phone towers to the company which bought rival Spark's network.

Connexa and Ontario Teachers' Pension Plan will buy 2degrees' 1124 towers for $1.08 billion.

Connexa was formed following the sale of a 70 percent stake in Spark's towers to Ontario Teachers' in July 2022, with Spark retaining a 30 percent stake.

2degrees, owned by Australian investment bank Macquarie, will have a 20-year right of use of the towers, with right of renewal, with Connexa committing to build or co-locate a further 450 sites over the next 10 years.

Connexa chief executive Rob Berrill said adding the 2degrees towers would give it the size and scope for future rational expansion.

"We will be able to achieve greater operational efficiencies through increased infrastructure sharing, which means fewer unnecessary mobile tower builds in local communities and faster deployment of towers to improve network coverage and capacity across Aotearoa.

"Our model is to focus on serving our customers through a long-term approach to asset management, and increasing asset utilisation and performance."

Ontario Teachers would contribute all the additional equity capital required for the acquisition, which will result in Spark's shareholding in Connexa falling to 17 percent from 30 percent.

Spark chief executive Jolie Hodson said the deal would be good for mobile services in New Zealand.

"The addition of 2degrees' passive mobile tower assets into Connexa will deliver greater operational efficiencies that will support more infrastructure sharing, better network economics, and faster deployment of new digital infrastructure."

The sale of the 2degrees towers, which will need Overseas Investment Office and Commerce Commission approval, means foreign investors now own virtually all of New Zealand's mobile infrastructure, after Vodafone sold its network to a British-Canadian consortium in July, with local investor Infratil holding a minority stake.