Ontario Teachers’ Pension Plan is one step closer to fully owning Nextgen Group after Australia’s competition watchdog cleared the sale of the company’s fibre networks.
The Canadian pension currently owns a 71 percent stake in Nextgen, which runs one of Australia’s largest national fibre backhaul networks, with the remaining share held by construction firm CIMIC Group.
CIMIC said in August that it would divest all of its interest in the business to OTPP after Nextgen completes the sale of its networks assets to Australian telco Vocus Communications, following which the group will continue to own Metronode, a data centre business that operates as a separate entity.
Subject to the Vocus-Nextgen deal completion – and other conditions, including approval by Australia’s Foreign Investment Review Board – the proposed transaction will see OTPP become the sole owner of Nextgen, with CIMIC to net up to A$210 million ($160 million; €143 million) from the exit.
The deal got a boost today after the Australian Competition and Consumer Commission said it would not oppose Vocus’ acquisition of Nextgen’s networks.
The A$807 million deal, proposed earlier in June, includes the sale of Nextgen’s 17,000km national fibre network, the recently completed subsea North West Cable System connecting Port Hedland and Darwin, and a proposed Perth to Singapore subsea cable.
ACCC found that the services supplied by Vocus and Nextgen were largely complementary and that other major suppliers were sufficiently strong for the deal not to harm competition, it said in a statement.
“There was very little concern raised by market participants. Small broadband providers say they are not generally reliant on Nextgen to be able to compete. In addition, excess capacity in the wholesale transmission market provides an incentive for providers of wholesale transmission to sell that capacity, even if they are vertically integrated,” said Rod Sims, ACCC’s chairman. He added that Nextgen is the only remaining significant supplier of wholesale transmission services that isn’t vertically integrated.
In February this year, Vocus acquired Australian telecoms services provider M2 Group in an effort to expand its retail presence, particularly in the residential broadband market.
The ACCC said it would continue to keep a close watch on competition in the telecoms industry, especially given recent consolidation. “The four largest retail service providers, namely Telstra, Optus, TPG and Vocus, supply over 90 percent of broadband services in Australia,” added Sims. “Any future potential mergers or acquisitions that increase concentration can expect to receive close examination from ACCC.”