Spark has sold its celltower network's passive assets - the land, leases, and towers, retaining the electronics. Photo / Bevan Conley
Spark has sold its remaining 17% stake in celltower firm Connexa to Canadian pension fund CDPQ (Caisse de depot et placement du Quebec) for $314 million.
The move was broadly expected. The telco is on a quest to raise up to $1 billion to fund expansion of its data centre business over the next five years and had flagged possible asset sales.
Spark shares closed Wednesday at $2.80. The stock is down 45.9% for the year following its FY24 earnings miss and FY25 earnings and dividend downgrades, pinned in part on the soft economy and weakness in the telco’s IT services business with government agencies and large companies.
“In 2022, Spark sold 70% of its mobile tower business for $900m to a Canadian investment fund, the Ontario Teachers’ Pension Plan,” Craigs Investment director Mark Lister wrote this week.
“It elected to return a good chunk of it to shareholders by way of an on-market share buyback, which began early last year.
“In hindsight, the conservative option would have been to hang on to this capital.”
Spark sold its passive celltower assets – land, leases, and physical towers – under the deal, retaining its electronics. Access, upgrades, and new towers were included as part of the package.
Spark’s share of Connexa was watered down to around 17% when Connexa bought 2degrees’ mobile tower infrastructure in a $1.1b deal that closed in June last year.
As part of the agreement announced this morning, the Ontario Teachers’ Pension Plan will also sell 33% of its shareholding to CDPQ. On completion of the transaction Ontario Teachers’ Pension Plan and CDPQ will each hold a 50% co-controlling interest in Connexa, Spark said in an NZX filing.
The telco’s shares are at a decade low, but Craigs’ Wade Gardiner and Morningstar’s Brian Han have both recently said investors have overreacted to the telco’s setbacks. Gardiner has a $3.60 12-month target on the stock, which he upgraded from neutral to overweight this week. Han sees Spark’s intrinsic value at $4.30.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.