Another party has dropped out of the race to buy the $2bn portfolio of Optus telecommunications towers – this time it is the Macquarie-backed Axicom that has left the race.
It comes after New York-based buyout fund Kohlberg Kravis Roberts departed the auction at the start of this month.
Morrison & Co also opted not to bid due to its acquisition of a 49 per cent stake in Telstra’s Australian tower portfolio with the Future Fund for $2.8bn.
Axicom is the former Crown Castle towers business that is largely owned by Macquarie Infrastructure and Real Assets and was advised by Credit Suisse and Macquarie Capital.
Crown Castle was purchased in 2015 for $2bn by a MIRA-led consortium.
It is understood that Axicom left the race because of the price expectations and sale terms rather than due to concerns about the Australian Competition and Consumer Commission.
Axicom counts Optus as a customer and some believed that gaining ACCC clearance may have been a challenge, given that it is also a significant owner of local towers.
It is understood that the Optus towers process is turning out to be highly complex and requiring a great deal of focus from bidding groups.
KKR was bidding with Canada’s Ontario Teachers’ Pension Plan and the Queensland Investment Corporation, which are still said to be in the race, advised by Citi and Gresham.
Other bidders are Canadian private equity fund Brookfield, AustralianSuper, advised by Jefferies, and the Symphony Consortium, comprising Stilmark, backed by Canada-based OMERS Infrastructure, and ATN International.
The Symphony Consortium is advised by Royal Bank of Canada and Q Advisors.
Final bids for the Bank of America-run Optus Towers competition are due at the end of September and groups were short-listed in the second round of the competition in early July.
A data room opened last month for the suitors to conduct due diligence and management presentations are now taking place.
Optus is owned by the Singtel, which is backed by the Singapore government holding company Temasek, and is requiring that the new joint venture partner not only owns the majority of its Australian tower portfolio but assists in the construction of new towers as well.
Singtel is looking to sell down its Optus towers to help fund the rollout of its 5G network.
On offer is a portfolio of between 2000 and 2500 Australian telco towers, and buyers are being offered the opportunity to own about 70 per cent of the portfolio, thought to be worth more than $2bn.
The understanding is that the portfolio on offer generates about $100m of earnings before interest, tax, depreciation and amortisation.
Initially, a large group of up to 30 parties showed interest.
However, it comes at a busy time in the infrastructure space with many opportunities on offer to unlisted investors, cashed up and eager to spend amid a low interest rate environment.
TPG Telecom is said to be waiting for the outcome of the Optus auction before placing its own tower portfolio on the market on the back of the strong price Telstra achieved.
Analysts believe its portfolio of 1200 passive tower infrastructure assets could sell for between $1bn and $1.2bn
New Zealand telecommunications company Spark has also signalled a potential sale of a stake of its portfolio of 1500 towers.
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