By Stuart Condie 
 

SYDNEY--Telstra Corp. will return about 1.40 billion Australian dollars (US$1.05 billion) to shareholders after agreeing to sell a 49% stake in its mobile towers business to a consortium including Australia's sovereign wealth fund.

Australia's largest communications provider on Wednesday said a consortium comprising Australia's sovereign Future Fund and two superannuation funds--Commonwealth Superannuation Corporation and Sunsuper--will acquire the stake in a deal valuing the unit at A$5.9 billion.

Telstra said it expected net cash proceeds after transaction costs of A$2.8 billion at completion in the first quarter of fiscal 2022, and that it would return about half to shareholders during that financial year.

Chief Executive Andrew Penn said Telstra planned to give details of the mechanism by which it would hand over the cash when it announces its FY 2021 results in August. He said a share buyback was among the options.

Mr. Penn said Telstra will invest about A$75 million in its regional network, with the remaining proceeds directed toward debt reduction.

Telstra will retain a majority stake in the unit, which is Australia's largest mobile tower infrastructure provider with approximately 8,200 towers.

Telstra started preparations for the stake sale in November, when it split its operations into three businesses, later upping this to four. The move was also seen by analysts as getting Telstra ready to bid in the expected privatization of the government-owned National Broadband Network.

Telstra had planned to seek investment early in its 2022 financial year, which starts on Thursday, but accelerated its plans following an approach by the consortium.

"They recognized the value of these assets and provided a compelling rationale to progress the transaction ahead of schedule," Mr. Penn said.

The InfraCo Towers business will operate under a board chaired by the Chief Executive of Telstra's infrastructure unit, Brendon Riley. Jon Lipton, who currently heads the towers business, will be its Chief Executive.

As well as its mobile towers infrastructure unit, Telstra has a services unit to hold products and assets such as mobile spectrum. It has an infrastructure unit for assets including data centers and said in March it was carving out another for international assets such as sub-sea cables.

Telstra shares last traded at A$3.60, up 21% since the start of the calendar year.

 

Write to Stuart Condie at stuart.condie@wsj.com

 

(END) Dow Jones Newswires

June 29, 2021 19:20 ET (23:20 GMT)

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