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Infratil confident of Vodafone clearance; keen to keep Trustpower

Monday 20th May 2019

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Infratil is confident its purchase of Vodafone New Zealand will be approved by regulators and says it has no interest in selling out of Trustpower to help secure a deal.

Infratil and Brookfield Asset Management are seeking Commerce Commission approval for their $3.4 billion purchase of Vodafone.

Given Infratil’s controlling stake in Trustpower – a small competitor in the fixed broadband market – it undertook to either quit the venture with Brookfield or divest its stake in Trustpower if the commission opposed the deal.

Infratil chief executive Marko Bogoievski said the two options were required by Vodafone’s parent company in a mechanism intended to ensure the transaction would close regardless.

“Both sound quite unattractive,” he told investors in Wellington.

“They don’t actually relate at all to our preferences. We actually like Trustpower and would like it to stick around in our portfolio.”

Bogoievski said the risks, having agreed to the terms, seemed acceptable based on advice the company has taken and its own assessment of the issues the Commerce Commission will address.

Structural separation of the market, open-access fixed networks and equivalent wholesale access level the playing for smaller players and new entrants in a market where the barriers to entry are relatively low, he said.

Trustpower is currently Infratil’s biggest asset, at $1.1 billion, followed closely by Canberra Data Centres at $841-$942 million and Wellington International Airport at $770-850 million.

Infratil’s planned purchase of Vodafone will transform its portfolio, with 76 percent of the post-acquisition assets being split equally between renewable energy and data and connectivity.  Those two segments account for 48 percent and 22 percent of the portfolio currently.

Bogoievski said Wellington Airport and the company’s retirement interests remain important investments.

But he said the “two large buckets” of renewables and data and connectivity promise strong growth.

The outlook for the major firms in those sectors, Tilt Renewables, Canberra Data Centres and Longroad Energy in the US, is very strong and the company has “extraordinary” visibility over a string of potential investments they will deliver during the next two to three years.

“The pipeline’s there in existing platforms and is ready to be hit.”

Bogoievski noted that Melbourne-based Tilt is both an operating company and a developer with a strong pipeline of potential projects.

Longroad is of another scale again, he said, developing “massive” utility scale solar and wind projects and with a pipeline of 8 gigawatts of potential capacity.

Bogoievski said Canberra Data Centres, which has now expanded into Sydney, is growing rapidly and has probably been a factor in the re-rating of Trustpower’s shares.

The business, and the trend toward increased government demand for greater and more secure data capacity, is still in its early stages. CDC’s earnings in the past year increased 30 percent.

“There are not many infrastructure assets doing anything like this.”


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