Friday, 15 May 2015 08:01

Macquarie Bank buys Australia’s mobile towers for $2B Featured

By Graeme Philipson

Nearly 2000 mobile phone towers around Australia are back in local hands thanks a large wad of cash to be handed over to the current US owner by Macquarie Bank.

The infrastructure arm of Australia’s Macquarie bank has signed a deal to buy CCAL, the Australian subsidiary of US public company Crown Castle, which owns the great majority of Australia’s mobile phone towers. The deal is worth $2 billion in cash.

That is 20 times annual earnings, which means Crown sold at – and Macquarie paid – a premium. ‘Millionaire factory’ Macquarie obviously thinks the assets are worth it – mobile comms is a fast growing business, and if you own the infrastructure assets you can’t go wrong.

CCAL is 76% owned by Crown Castle, which reported revenues of US$3.69 billion for 2014. Based on the reported profits and the number of towers in Australia, the local operation comprises about 5% of this, meaning local revenues of around $200 million, almost all of it in lease costs from Australian carriers.

The deal was flagged in January, when Crown Castle announced that it planned to “explore the potential sale” of CCAL. Macquarie Bank won the subsequent bidding war, which is understood to have included First State Super and Australia’s Future Fund.

Established in 2000, CCAL is the largest communications tower operator in Australia. It has approximately 1,800 sites across the all states and territories. Telstra, Optus, Vodafone Hutchison Australia and NBN Co are all customers, along with many emergency service network providers.

CCAL was expected to contribute approximately US$100 million ($124 million) to Crown Castle's previously provided full year 2015 outlook for adjusted EBITDA of $2.145 billion to $2.160 billion. The EBITDA figure indicates it is a very profitable company. Globally, Crown Castle has approximately 40,000 towers and 14,000 small cell nodes supported by approximately 7,000 miles of fibre.

Now Australia’s largest tower operator is in Australian hands. Macquarie has made no public announcement about the deal, which was signed in the US and made public only late Thursday night.

"The sale of CCAL allows us to redeploy capital towards our growing small cell networks," said Crown Castle CEO Ben Moreland in a statement. "We believe we are in the early stages of small cells deployment and are excited by the opportunities that we see ahead of us.

“While CCAL has been a great contributor to our business, our decision to divest this business allows us to re-allocate capital to growth enhancing initiatives in the US market, which we believe is the most attractive wireless market in the world for wireless investment. I would like to thank our friends and colleagues at CCAL who, since CCAL’s establishment in 2000, have built CCAL into the leading tower operator in Australia.”

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