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Private equity firm Brookfield Infrastructure bought a 93% stake in Wireless Infrastructure Group (WIG), a UK-based wireless infrastructure operator, for £387 million ($504 million), according to Reuters. WIG operates a network of 2,000 pieces of communications equipment, ranging from cell towers to in-stadium connectivity equipment, in the UK, Ireland, and the Netherlands.
This latest purchase expands Brookfield’s presence in the global telecoms market. In July 2019, the private equity group’s parent company Brookfield Asset Management was part of a consortium that spent NZ$3.4 billion ($2.3 billion) to buy Vodafone’s telecom business in New Zealand.
In October 2018, Brookfield Asset Management picked up a minority stake in Brazilian telecom Oi. And last week, Brookfield Infrastructure acquired a vast portfolio of tower assets from India’s telecom juggernaut Reliance Jio for $3.7 billion. These recent purchases have given Brookfield a global presence in at least four distinct regions of the trillion-dollar global telecoms market.
Private equity firms see a large growth opportunity in connectivity, especially towers. The GSMA expects that global operator revenues and investments will jump by $110 billion between 2018 and 2025, to reach $1.14 trillion. Buying up divested tower assets is likely attractive to companies like Brookfield as they represent an opportunity to garner steady revenue from ongoing rental payments.
For instance, Jio recently signed a 30-year agreement to be the anchor tenant of the tower assets it sold to Brookfield. While these assets require significant upfront investments and ongoing upkeep, they could generate increased revenue down the road. Rental payments are likely to increase as telecoms deploy new antennas and equipment to build out their nascent 5G networks.
Telecoms wanting to sell off assets to cut debt could find willing buyers in firms like Brookfield. Telecoms are looking for ways to reduce debt as they spend big to expand their offerings with new services. For instance, US telecom AT&T sold 1,000 towers to a private equity firm for $688 million, in an effort to cut the debt from its $85 billion acquisition of Time Warner in June 2018.
And Jio sold off its 170,000 tower assets following the launch of two new connectivity business, which will likely further contribute to parent company Reliance’s mounting debt, which rose to $22 billion as of March 2019. As other telecoms plan to divest their tower assets — earlier this month, Orange announced plans to split up its tower operations — the presence of firms like Brookfield should be reassuring; it indicates the value of their assets, and an increase in interested parties can help drive up prices.
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