US operator Digital Colony joins battle for Optus telco towers

First bids for the Optus telco towers in Australia are due on June 17.

US-based mobile towers operator Digital Colony is believed to be getting serious in the auction of the $2 billion portfolio of Australian telecoms towers owned by Optus.

The company is based in Florida and has previously invested in Europe and South America and is said to be a keen contender for the business.

Sources have been pointing to Goldman Sachs as the investment bank now working for the group in the auction.

Singtel made a decision to sell its Optus towers in Australia earlier this year and has hired Bank of America to run the sales process for about 70 per cent of the portfolio, as it looks to build funds for its rollout of 5G technology across Australia.

First round bids are due on June 17.

Hot on the heels of the Optus process is one run by Telstra for a stake in its portfolio, and the thinking is that some parties are keeping their powder dry for that part of the competition.

While Digital Colony is yet to enter the Australian market, it is believed to be keen to make more acquisitions after growing from $4 billion under management to $20 billion.

Private equity firm EQT has partnered with the group before through its infrastructure arm, so the pair may opt to vie for assets together. EQT Infrastructure has made large investments in the telecoms fibre space.

The thinking is that operators may be given preference by Optus as buyers as it hopes to draw on the expertise of a group, although pension funds are known to have plenty of firepower when it comes to sales processes of infrastructure assets.

Australia-based telecoms tower company Stilmark is believed to be interested. It is backed by former Telstra boss David Thodey along with its Canadian pension fund backer Omers and ATN International.

Others that will line up are the former Crown Castle business Axicom, which is working with Credit Suisse and Macquarie Capital, along with Morrison & Co and the Future Fund, advised by Barrenjoey Capital.

The logic is that by Optus holding a stake, it will align the interests of the customer and the owner of the infrastructure.

Axicom remains the favourite by some to win the competition, providing the ACCC has no objections.

Spanish infrastructure owner Cellnex is understood to have dropped out of the running.

Canadian private equity fund Brookfield is also involved, and KKR, together with Queensland Investment Corp and Canada’s Ontario Teachers’ Pension Plan, is believed to be taking advice from investment bank Citi and advisory firm Gresham.

Lendlease is also understood to have tapped Morgan Stanley for a possible run at the business.