National Grid today agreed to sell its mobile phone mast business for £2.5 billion to the Australian bank Macquarie, the owner of Britain's second largest mast network, Arqiva.

The proceeds, more than the £2 billion or so expected, will be used to buy back £1.8 billion of National Grid shares. Its shares rose 9.5p to 808p minutes after it announced the deal.

The Grid announced plans to demerge the Wireless business last November. National Grid Wireless owns 5,000 mobile phone masts and 750 transmission towers for broadcasting television and radio channels in the UK, and is growing on the rising need for extra capacity from radio, television and mobile phone companies.

The demerger plan attracted several approaches for the business and led the company to postpone the demerger. It is thought that Blackstone, the US private equity group, was another contender. But it is likely Macquarie was able to offer more since it can make cost savings by combining its Arqiva business. The price is a healthy 19 times underlying earnings.

Steve Holliday, the Grid chief executive, said: "We are delighted with the outcome, which has secured an attractive premium for a great business which we have grown successfully."

He said he was confident that the sale delivered better value than a demerger would have done and would leave the company free to focus on US and UK electricity and gas distribution and transmission. He still aims to sell.the US mast business.

In the six months to September 2006, the Wireless business grew profits 17 per cent to £42 million. National Grid said in November that the wireless division was set for "double-digit growth".

National Grid bought the mast network from Crown Castle for £1.1 billion in 2004. The network included transmitters sold by the BBC in 1997.

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