With towerco M&A consolidation activities now embedded, Australia’s tower market is on the road path towards healthy expansion. Tower colocation, regional tower growth and tower resiliency will be among the key focuses.
Australia’s tower market began 2024 in a productive mood, supported by favourable legislation introduced by the country’s Federal Government and an interesting deal from towerco Everest Infrastructure Partners ANZ. There are many signs that the tower market in The Land Down Under is set to prosper in the longer term. The Federal Government has introduced policies within the past couple of years, including supporting mobile connectivity in new residential property developments and in funding for creating critical infrastructure resiliency and in connecting regional and rural locations in Australia.
The country finds itself in a very unique position when it comes to regional and rural coverage. With one of the lowest population densities and largest landmasses in the world, connecting rural Australia is a unique challenge. Some 75% of the country’s population live within 100km of the coast. This therefore requires a significant amount of infill coverage.
With the dust having settled on the M&A deals through tower carve-outs of both Amplitel and Indara, the countries' towercos are out to forge their own path on connecting Australians.
One of these opportunity pathways is the Federal Government’s amended Telecommunications in New Developments (TIND) policy. The policy, which was updated last February, sets out expectations on developers of new residential developments with more than 50 lots to consider mobile connectivity as part of the development and to work with MNOs for access to land for telecommunications facilities.
Under the amended TIND policy, developers are expected to engage towercos and MNOs early in the development process to ensure mobile connectivity is considered along with other essential utilities.
Policy objectives are expected to be integrated by State Governments into their planning and development guidelines and then by local councils in their development approval assessments.
Property developers and towercos match through TIND
Ultimately that should result in the build of macro sites, which should pose as an attractive opportunity for infrastructure sharing. These programs are typically designed to stimulate deployment of new or upgraded wireless infrastructure in areas where market failure exists which has resulted in regions being either unserved or underserved.
“If you are in a situation where you need to develop that property and you need to carve off a certain part of that land for a tower, ideally you want to carve off one piece of land and not three pieces of land – one for each carrier. So by doing it that one time, then it should build a build-to-suit ratio that should see strong colocation in the future,” William Heapy, CEO of Australian towerco Everest Infrastructure ANZ (Everest) tells TowerXchange.
“With approximately 200,000 residential dwellings needing to be constructed in Australia each year, developers play an important role in ensuring connectivity is built into the strategic planning and structure planning processes undertaken by state and local government, which happen well in advance of a developer applying for development consent,” said Cameron Evans, CEO, Indara.
Amplitel lobbied for the policy to be updated during the consultation phase prior to the policy amendment last February. It pointed to the importance of local councils and other government authorities as they have ultimate planning approval authority, but emphasised that the planning rules for existing residential sites were not applicable with new build designs.
“For example, where a local council planning scheme requires a minimum 400 metre minimum setback for a telecom facility from residential land use, this can be impossible to achieve in a new development,” the company stated.
“In addition, the planning and development approval processes for telecommunications facilities varies between states and territories and across local councils. This adds uncertainty in planning new infrastructure and can increase the costs of the site selection, acquisition and planning approvals during the development phase.”
Regional connectivity goals
The balance between urban and suburban population density has shifted ever since the covid outbreak when moving to more rural locations became popular. This has since created demand on the cell network that wasn’t otherwise there. Therefore it is expected that more and more regional and rural areas will receive new tower builds as well as perhaps an acceleration of 4G to 5G.
Everest’s Heapy said: “You can drive on an Aussie freeway and be unable to stream live radio in certain places. So there is a certain amount of new build that will continue. And I only see that growing because of the decentralisation of the Australian cities like Sydney, Melbourne, and Brisbane more and more people are moving to regional areas. That will be a robust catalyst for towercos and towers here in Australia.”
It is a very interesting time for Everest. The company completed the acquisition of towers sites owned by Australian telecommunications carrier and ICT managed services provider Vertel. TowerXchange estimates Vertel had 200 towers, which will increase Everest’s tower count to around 260 in Australia.
Everest Infrastructure Partners are an interesting acquirer for the telecom towers as their traditional business focus on land under towers. However, six months ago in December 2023 it announced the acquisition of 546 sites from Charter Communications jointly with TowerCo in the USA. The multi-asset investor closed US$600mn in Senior Secured Credit Facilities in the same month. Backed by debt financing and with lead equity sponsor Peppertree Capital Management behind them in all markets Everest Infrastructure Partners have dry powder to continue pursuing acquisition in this and other markets.
Everest said it has “several thousand” communications sites in the pipeline, and Heapy mentioned that Everest will do so by acquiring sites that are owned neither by other towercos or MNOs. Of the total number of towers in Australia, Heapy says around 10,000 of them has been consolidated between the MNOs and towercos. He adds that Everest will hope to consolidate the number of towers owned by various local businessmen who own one through to upwards of around 85 towers. “We’ve made offers to individuals who only own this many towers.
“And so we’re then able to achieve that aggregation at a discount to what the overall towercos have paid for their portfolios from the MNOs. And so we’re continuing to see that strategy rollout in the next five to ten years,” he concludes.
Ensuring tower resilience
Fellow towerco Indara also has laid its own distinctive path towards optimising its tower portfolio. Last month, the government announced A$17.4mn (US$11.5mn) in funding to be allocated for its Telecommunications Disaster Resilience Innovation (TDRI) program. One of the recipients was Indara, who will now be deploying solar panels to eight sites across Victoria, New South Wales and Western Australia as part of a solution to keep telecom infrastructure operating in the event of a power failure in the local area. The work is in collaboration with Optus and NBN.
It was also a recipient of the Federal Government’s latest round of funding totalling A$14.2mn (US$9.4mn), helping to develop telecom infrastructure resilience through the government’s Mobile Network Hardening Program.
In a natural disaster, extreme climatic conditions can disrupt the sites’ power. If a site relies on just one power source and an unforeseen event disrupts it, then the site could provide limited or no coverage until the sites’ power is restored.
Indara will use the funding to keep the eight solar panels operating continuously, along with a power generator and batteries within each site as a backup. In the event of grid failure, the generator will automatically take over the site power generation. Its battery solution, once enough solar electricity is generated to service 100% of the site requirements, the excess electricity is stored in on-site batteries. In the event that mains electricity is lost, the operators will drop their equipment into low-power mode, with the solution robust enough even in difficult generation conditions.
“In a natural disaster, a call can be the difference between life and death,” said Evans. “It’s impossible to guarantee full protection against natural disasters, but this funding means we can significantly increase their resilience through multiple power sources.”
Australia is heading towards a phase in its digital infrastructure aspirations, and it seems that the country’s towerco players are responsive to the task at hand.
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