$1bn-$1.2bn in the air for TPG telco towers

TPG on Friday indicated that the company was conducting a strategic review of its portfolio of 5800 mobile towers, which includes those on rooftops. Picture: AFP

TPG Telecom could achieve a price of between $1bn and $1.2bn for its telecommunication towers, according to analysts at Credit Suisse and JPMorgan.

TPG on Friday indicated that the company was conducting a strategic review of its portfolio of 5800 mobile towers, which includes those on rooftops.

It is the owner of passive tower infrastructure for 1200 mobile phone towers, and analysts believe a sale of these assets could be on the agenda.

New Zealand telecommunications company Spark has also signalled a potential sale of a stake of its portfolio of 1500 towers.

Telco groups are looking to sell their towers after Telstra netted $2.8bn for a sale of 49 per cent in its telecommunications tower portfolio, and strong interest exists for the 70 per cent selldown in the $2bn portfolio of Optus telecommunication towers, with an auction under way.

However, some industry experts believe Spark and TPG may have left it too late, with the groups unlikely to receive top dollar like Telstra and Optus.

The TPG Telecom portfolio generates about $50m of annual earnings before interest, tax, depreciation and amortisation, the analysts estimate. With a $1bn valuation, this equates to 20 times its EBITDA.

The sale of the Telstra towers to Morrison & Co and The Future Fund was for 28 times, but Credit Suisse analysts say the portfolio is of greater scale. They say a transaction could be a positive catalyst for TPG, but suspect that any monetisation remained uncertain.

The plan to consider a selldown of towers comes after TPG agreed to merge with Vodafone Australia in 2018.

JPMorgan analysts said by applying Telstra’s transacted value per tower of $1m, it would imply a value on the TPG Telecom portfolio of $1.2bn.