Bulletin: Spark's Credit Metrics Insulated From Connexa Acquisition Of 2degrees Towers

MELBOURNE (S&P Global Ratings) Dec. 15, 2022--We expect the credit metrics of telecom operator Spark New Zealand Ltd. will face no effect from a proposed NZ$1,076 million acquisition by its minority-owned Connexa of passive mobile telecommunications tower assets owned by Spark rival, 2degrees. We note there is no cash outflow for Spark related to this transaction as it will not contribute equity to the acquisition. Consequently, Spark's shareholding in Connexa will be diluted from 30% to about 17% following the completion of the acquisition in mid-2023. Our base case for Spark's earnings had not included any distributions from Connexa due to the ongoing capital required by Connexa for the construction of 670 towers for Spark's use. That said, Spark will

...December 14, 2022 MELBOURNE (S&P Global Ratings) Dec. 15, 2022--We expect the credit metrics of telecom operator Spark New Zealand Ltd. will face no effect from a proposed NZ$1,076 million acquisition by its minority-owned Connexa of passive mobile telecommunications tower assets owned by Spark rival, 2degrees. We note there is no cash outflow for Spark related to this transaction as it will not contribute equity to the acquisition. Consequently, Spark's shareholding in Connexa will be diluted from 30% to about 17% following the completion of the acquisition in mid-2023. Our base case for Spark's earnings had not included any distributions from Connexa due to the ongoing capital required by Connexa for the construction of 670 towers for Spark's use. That said, Spark will have a shareholding in a much larger business that is likely to deliver improved operating benefits. We also note that following the acquisition Spark will retain its existing governance rights including board representation....

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