Sharechat Logo

Infratil confident of Vodafone clearance; keen to keep Trustpower

Monday 20th May 2019

Text too small?

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.”


Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar sags after avalanche of data and central bank action
Fonterra board starts planning chair succession
Fulton Hogan keeps Australian civil construction unit
Time for congestion pricing has come - NZIER
Colliers defends KiwiBuild as 'far from a colossal failure'
Pushpay shares rise as cost-cutting upgrades earnings guidance
20th September 2019 Morning Report
NZ dollar weaker against British pound on EC president's Brexit optimism
Todd plans Kapuni drilling campaign
MARKET CLOSE: NZ shares gain; appetite for KFC helps Restaurant Brands hit record

IRG See IRG research reports