TPG Telecom weighing potential sale of towers

TPG Telecom is considering potentially offloading its telecommunications tower assets, revealing it is undergoing a “strategic review” to obtain a preliminary market assessment.

The telco operates a mobile network of 5,800 rooftops and towers, and also owns the passive infrastructure of some 1,200 of the sites, most of which are in metro areas and in high average tenancy.

Fellow telco giant Telstra in 2018 made steps to prepare for a potential sale of its telco towers, spinning out a new wholly owned entity called InfraCo Towers as part of its T22 strategy.

In its 2021 half-year financial results announcement released today, TPG said the review comes amid strong demand for telco infrastructure assets.

“While the company is continually seeking opportunities to maximise shareholder value, it has not made any commitment in relation to these assets,” the announcement read.

For the six months ended 30 June 2021, the telco posted growth in revenue and EBITDA on the back of its enterprise and fibre businesses, and despite “significant challenges” like COVID-19 restrictions, NBN costs and 5G vendor restrictions.

Revenue for the period increased 71 percent from $1.54 billion in H1 2020 to $2.6 billion, while EBITDA grew 67 percent from $531 million to $886 million.

Net profit after tax declined 8 percent from $83 million to $76 million, while earnings per share dropped 79 percent from 19 cents to 4 cents.

“[TPG Telecom’s] EBITDA result is pleasing and demonstrates a solid underlying performance achieved through the realisation of $38 million in merger cost synergies and strong commercial management,” chief executive Iñaki Berroeta said.

"In an environment with continued headwinds from COVID-19, NBN margin erosion and the new RBS levy, and residual challenges from the merger delay and 5G vendor restrictions, we are performing well.”

Berroeta added that TPG is in a stronger position to grow through the groundwork the company laid over the past year since the TPG-Vodafone merger.

“With 7.5 million consumer and business services, the largest family of owned telco brands in Australia, and a valuable portfolio of infrastructure assets, there is enormous potential to drive greater shareholder returns and exceptional customer experiences.”

Looking into its FY 2021 second half, TPG said it is “in a strengthened position” following ”solid” progress on integration activities and its strategic priorities. 

The company said it is on track to reach 85 percent 5G population coverage in ten of Australia’s largest cities and regions by the end of the year to support growth in its mobile and home wireless offerings.

TPG will also look to bring in more fixed customers onto its own infrastructure, lift its impact in the enterprise and government market, improve mobile performance and reach its $70 million merger cost synergy target for 2021.