Infratil Limited (ASX: IFT) is one step closer to completing its acquisition of Vodafone NZ after receiving clearance from the Commerce Commission.
About Infratil And Vodafone NZ
Infratil is a New Zealand-based infrastructure investment company. It owns a range of diversified assets including airports, electricity generators, retailers, and a public transport business. Its operations cover New Zealand, Australia and the US.
Infratil announced in May that it and Brookfield Asset Management Inc would acquire Vodafone NZ for NZ$3.4 billion.
Vodafone NZ generated revenue of NZ$2 billion and underlying EBITDA of $463 million in the 12 months ended 31st March 2019. The video below explains what EBITDA is.
What’s Next?
Now that Infratil has received Commerce Commission clearance, the next big hurdle is the Overseas Investment Office (OIO) granting consent.
According to Infratil’s statement today, “Infratil remains confident that OIO consent will be granted, and that completion is likely to occur within the next two months”.
Since announcing the acquisition, the Infratil share price is up around 5.5%.
Is Infratil A Buy?
According to Infratil’s most recent annual report, they are forecasting growth in underlying EBITDAF of at least 17.7% in the year ending 31st March 2020. Much of that growth will be a result of the Vodafone NZ acquisition.
What surprises me is the fact that Infratil paid a dividend despite negative earnings per share in the last financial year. Infratil’s profit and cash flow were completely eroded last year by capital expenditure and investment.
Although that investment may pay off and lead to long-term growth, I don’t like the fact that cash flow was down 6.4% last year but Infratil still increased its dividend.
Personally, I’d rather invest in one of the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
