Singtel's ATN to acquire Australia telco infrastructure provider Axicom for A$3.6b

SINGTEL unit Australia Tower Network (ATN) has proposed to acquire Axicom, a provider of telecommunications tower infrastructure in Australia, for A$3.6 billion (S$3.7 billion).

ATN's shareholders - Singtel and AustralianSuper - on Friday (Apr 1) said the strong synergies between Axicom and ATN would provide exceptional growth opportunities which will benefit customers, employees and the community in the long term.

Axicom owns and operates 2,000 telecommunication sites across Australia. Meanwhile, ATN owns mobile networks and rooftop sites in Australia, and also operates telecommunications towers for Singtel's Australian telco subsidiary Optus.

AustralianSuper head of infrastructure Nik Kemp said Axicom is complementary to its existing digital infrastructure portfolio and the combination of the 2 businesses will "result in the creation of a provider with a truly national footprint".

He also noted that AustralianSuper will continue to seek further opportunities in this sector both domestically and globally, as it looks to double its infrastructure portfolio over the next 5 years.

After the proposed acquisition, Singtel, which currently has a 30 per cent stake in ATN, will hold an effective interest of 18 per cent in the combined ATN and Axicom business.

Meanwhile, AustralianSuper's stake in the business will grow to 82 per cent.

Singtel had in October 2021 sold a 70 per cent stake in ATN to AustralianSuper for A$1.9 billion, as part of its efforts to reinvest in growth areas that will underpin sustainable dividend payouts for investors.

Telcos have been seeing the need to improve economies of scale by consolidating with peers - particularly around building and running networks - as they pursue growth opportunities and try to spread out the cost of 5G capital expenditure.

This comes as players in the sector face rising competition, yet still see substantial investment costs in new technology areas such as 5G.

In 2021, Total Access Communication (Dtac) - majority-owned by Norwegian telco Telenor - and Thai conglomerate Charoen Pokphand Group's telco unit True Corporation proposed a merger in a bid to retain market share and drive cost efficiencies. The merger would make the combined entity the largest telco in Thailand with over 50 per cent market share.

Meanwhile in Indonesia, telcos Indosat and Hutchison 3 Indonesia completed a merger to form Indosat Ooredoo Hutchison and gain around 26 per cent of revenue market share.

For companies offering different services, a merger could also improve customer experiences and operating synergies, such as in the acquisition of broadband Internet and cable TV provider Link Net by Indonesian telco XL Axiata and its parent company Axiata Group.

In fact, carving out tower or data centre assets may also improve the valuation of such assets, particularly as Covid-19 has created new demand for data centre space, as more work is done remotely.

Singtel said it will fund A$212 million of the acquisition through the issue of new ATN shares and unsecured shareholder loans.

Shares of Singtel closed at S$2.64 on Thursday, down S$0.02 or 0.8 per cent.

READ MORE:

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• Singtel Q3 profit rises 23.8% on gains from Australia tower asset disposal
• Hot stock: Singtel up 3.9% on potential stake sale in Australia Optus fibre assets
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