Overview of Spark’s Latest Move in the Mobile Tower Business
Spark New Zealand has announced the sale of its remaining 17% stake in its mobile tower unit, Connexa, to global investment group CDPQ for NZ$314 million ($181 million). This move is a continuation of Spark’s strategy to divest non-core assets and strengthen its balance sheet.
The transaction, once completed, will result in Ontario Teachers’ Pension Plan (OTPP) and CDPQ each holding a 50% co-controlling interest in Connexa. This sale follows a series of strategic divestments, including the initial 70% sale of Connexa to OTPP in 2022.
Transaction Details and Financial Implications
Upon finalization of the sale, Spark New Zealand expects to report a gain of approximately NZ$70 million ($40.5 million) in EBITDAI (Earnings Before Interest, Taxes, Depreciation, Amortization, and Investment Income). This is part of the company’s ongoing strategy to optimize its asset portfolio and improve its financial position.
The transaction is subject to approval from New Zealand’s Overseas Investment Office (OIO) and is expected to close during the third quarter of the 2025 fiscal year. Spark’s two appointed directors will step down from the Connexa board after the deal is finalized.
Spark New Zealand’s Strategic Shift Towards Data Centers
While Spark has divested its mobile tower assets, it is not stepping away from the telecommunications sector. The company has emphasized its commitment to continuing its focus on delivering growth through its data center strategy. In 2023, Spark outlined plans to invest between $156 million and $189 million in data centers over the next three years.
This strategic pivot is part of Spark’s broader focus on enhancing its data center footprint, in line with the growing demand for cloud-based services and edge computing solutions. The company’s involvement in Connexa’s tower operations will continue, as it remains a key customer of the tower business, ensuring the deployment of its mobile network.
The Evolution of Connexa and its Ownership Structure
Connexa has been an independent entity since Spark’s initial sale of a 70% stake in its passive mobile infrastructure to Ontario Teachers’ Pension Plan in July 2022. That transaction, valued at NZ$900 million ($573 million), marked the beginning of Spark’s exit from the mobile tower business.
Since then, Connexa has expanded its portfolio, notably acquiring 2degrees Networks Limited’s passive telco tower assets in 2023 for NZ$1.1 billion ($666 million). With the completion of the current transaction, OTPP and CDPQ will each control 50% of Connexa, strengthening the company’s position in the telecom infrastructure market.
CDPQ’s Role in Connexa’s Future
CDPQ, a global investment group based in Canada, has long been an active player in infrastructure investments. Its acquisition of a 33% stake from OTPP will position the firm as a co-controlling partner, alongside OTPP, in Connexa. CDPQ’s involvement is expected to bring additional strategic insights and operational expertise to Connexa, further solidifying the tower company’s future prospects.
The partnership between OTPP and CDPQ will enable Connexa to continue its growth trajectory, maintaining high-quality services for its existing and future customers. Spark New Zealand, as a continued customer of Connexa, will rely on the infrastructure provided by the tower company to expand its mobile network coverage.
Spark’s Commitment to Data Centers: A Growing Priority
Despite the divestment of its mobile towers, Spark remains firmly committed to the future of data centers. In line with its vision for digital transformation, Spark has recognized the growing importance of data centers in supporting the digital economy, particularly with the rise of cloud computing, edge services, and the increasing demand for secure, high-performance infrastructure.
Spark’s data center strategy is designed to ensure that the company stays at the forefront of technological advancements and continues to provide robust, scalable solutions for businesses and consumers alike. By investing in state-of-the-art facilities, Spark aims to meet the increasing demand for cloud services, particularly in the areas of enterprise IT, big data, and artificial intelligence.
Spark’s Ongoing Shift and Strategic Growth
The sale of Spark’s remaining stake in Connexa is a significant step in the company’s strategic evolution, one that emphasizes its focus on data centers and other core business areas. While the divestment allows Spark to optimize its portfolio, its ongoing commitment to innovation in data center infrastructure is set to enhance its position in the telecom and technology sectors.
As Spark New Zealand shifts its focus, the broader telecom industry is witnessing a shift towards digital infrastructure investments, where mobile towers and data centers are increasingly seen as complementary components for a connected world.
FAQ Section
1. Why did Spark sell its stake in Connexa?
Spark sold its remaining 17% stake in Connexa as part of its broader strategy to divest non-core assets and strengthen its balance sheet, while focusing on expanding its data center investments.
2. What is the financial impact of the sale on Spark New Zealand?
The sale of Spark’s stake in Connexa is expected to generate a gain of NZ$70 million ($40.5 million) in EBITDAI, which will contribute positively to Spark’s financial performance.
3. Who owns Connexa now?
After the transaction, Ontario Teachers’ Pension Plan (OTPP) and CDPQ will each hold a 50% co-controlling interest in Connexa, with CDPQ purchasing a 33% stake from OTPP.
4. What is Spark’s future focus after selling Connexa?
Spark is focusing on expanding its data center strategy, with plans to invest between $156 million and $189 million over the next three years to meet the growing demand for cloud and digital infrastructure.
5. Will Spark continue to use Connexa’s towers?
Yes, Spark will remain a key customer of Connexa and will work with the company to deploy its mobile network, while continuing to own its radio equipment and spectrum.