Australian, NZ telecom sector-loan volumes rise in 2022 YTD on the back of strong M&A activity

Data Insight DebtDynamics 25 May

Australian, NZ telecom sector-loan volumes rise in 2022 YTD on the back of strong M&A activity

Acquisition-related transactions helped boost by 19.6% YoY the volume of club and syndicated loans obtained by Australian and New Zealand telecommunication companies so far in 2022.

Telecoms companies completed a total of USD 5.68bn-equivalent across seven loan deals in 2022 year-to-date (YTD), up from USD 4.75bn via four deals in the same period last year with 57% or USD 3.24bn of the total 2022 of those transactions being used to fund acquisitions. This is almost on par with the USD 3.77bn acquisition-related telecoms loans recorded for all of 2021.

In April, a consortium comprising of AustralianSuper and Singapore Telecommunications (Singtel)’s Australia Tower Network signed an AUD 3.05bn (USD 2.13bn) loan to part-fund its AUD 3.58bn acquisition of telecommunications tower operator Axicom, while a NZD 1.35bn-equivalent (USD 917m) Term Loan B was priced in March to part-fund Macquarie Infrastructure and Real Assets (MIRA)- and Aware Super-owned fiber-network provider Vocus Group’s NZD 1.7bn proposed acquisition of New Zealand telecommunications provider 2Degrees Mobile.

A consortium comprising Morrison & Co, Commonwealth Superannuation Corp and Brookfield Australia (a unit of Brookfield Asset Management) is currently in the market for an around AUD 2bn (USD 1.39bn) five-year loan to back its proposed AUD 3.62bn acquisition of ASX-listed telecommunications-services provider Uniti Group.

The acquisition-related loan volumes recorded so far this year follows a series of Australian telecom M&A transactions last year, including Telstra’s divestment of a 49% interest in its telecommunications-network-tower business to a consortium of Future Fund, Commonwealth Superannuation Corp, Sunsuper and Morrison & Co. Separately, Singtel sold a 70% stake of its subsidiary Australia Tower Network to AustralianSuper and, in another deal, Vocus Group was acquired by MIRA and Aware Super. Loans related to these three M&A transactions totaled USD 3.3bn-equivalent.

M&A activity in Australia’s telecom sector surged to USD 5.4bn-equivalent between January and end April this year and accounted for 41.7% of the total value of transactions in the Asia Pacific telecoms sector in the same period, according to Debtwire sister publication Mergermarket. The USD 5.4bn deal value was the largest volume in a Jan-April period since 2009. AustralianSuper’s proposed acquisition of telecoms tower business Axicom and the Uniti Group deal were the eighth and nineth biggest telecom-linked acquisitions respectively announced globally in 4M22, according to Mergermarket.

On May 9, OMERS Infrastructure announced it had signed an agreement to acquire a 100% stake in TPG Telecom’s mobile towers and rooftop portfolio for an enterprise value of AUD 950m. Meanwhile, at least three other mobile tower sales across Australia and New Zealand could emerge: Canada Pension Plan Investment Board-owned broadcast and mobile infrastructure company BAI Communications is offloading its Australian business while Infratil and Brookfield-owned Vodafone New Zealand and, separately, NZX-listed Spark New Zealand are preparing to sell their respective stakes in their networks, according to a report by Debtwire sister publication Inframation.

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