PLDT sells nearly 6,000 towers for P77B

PLDT Inc. on Tuesday announced the sale and leaseback of its tower assets to two foreign telecommunications infrastructure firms in a bid to improve its services and reduce financing costs.

In a disclosure to the Philippine Stock Exchange, PLDT said its subsidiaries Smart Communications Inc. and Digitel Mobile Philippines Inc. signed deals with the subsidiaries of Malaysia-based edotco Group and Singapore-based EdgePoint Infrastructure for the sale of 5,907 telecom towers, about 50% of its entire tower network, for P77 billion.

The amount fetched by PLDT for the transaction is higher than the earlier estimate by its chairman, Manuel V. Pangilinan, of "north of P50 billion." 

At a press conference in Makati City, Pangilinan told reporters that the telco giant managed to sell its tower assets higher than its estimates due to the “good condition of our towers” as well as the “credit standing of PLDT.”

In particular, edotco Group’s ISOC edotco Towers Inc. will purchase 2,973 towers located primarily in Luzon, Visayas and Mindanao for P42 billion.

EdgePoint’s Comworks Infratech Corp. will acquire 2,943 towers located in Luzon for P35 billion.

PLDT chief financial officer Anabelle Chua clarified that PLDT only sold physical tower structures and passive equipment to the tower companies, not its main radio equipment.

Chua said that Smart signed a 10-year lease agreement with the companies that bought PLDT’s tower assets.

This will result in an annual savings of P2.6 billion in financing costs, primarily for tower maintenance and operations, she added. 

The government implemented a "common tower policy" in which telcos will only have to lease towers instead of building their own to reduce the cost of maintenance and, in turn, cut the cost of telecommunications services.

“The winning bidders are all recognized tower operators internationally, significant tower operators. We believe that they will be more likely efficient operators to deliver lower cost of tower services. And for us, we are able to achieve a certain level this year because of the arrangement of the leaseback, it will be cheaper in the long run,” Pangilinan said.

Chua said proceeds of the transaction will be used to reduce PLDT’s debt by P27.5 billion and fund the company’s major cash requirements, which translates to an avoidance of additional debt of up to P24.5 billion.

Moreover, PLDT said that the sale and leaseback deal will be complemented by a new tower building commitment of 1,500 towers in total over the next few years by the two tower firms.

According to PLDT, the transaction price of P77 billion makes this deal the largest-ever acquisition of assets in the Philippines by international investors.

Upon completion of the transaction, the winning bidders will become the largest common tower operators in the country, it added.

edotco Group manages over 54,000 towers across nine countries in Asia and is majority-owned by Axiata Group, a major telecom operator across Asia.

EdgePoint, on the other hand, owns approximately 10,000 towers across Indonesia and Malaysia and is backed by DigitalBridge Group Inc., a leading global digital infrastructure investment firm with over $45 billion in assets under management.

“This transaction presents a highly strategic acquisition for edotco as it diversifies and strengthens our pan-Asian platform with exposure to a nascent, high-growth market with strong governmental support. With an established platform in the Philippines, edotco can play an instrumental role in developing the nation’s digital economy infrastructure while accelerating its organic and inorganic growth strategy,” said Adlan Tajudin, CEO of edotco Group.

“EdgePoint is delighted and honored by PLDT’s faith in our capabilities. We look forward to working with PLDT in true partnership. We also look to bring to bear the vast experience of our local partners, Comworks Inc. and SMS Global Technologies Inc. We are committed to building a world class operation to expand next-generation connectivity solutions, bridging the digital divide in the Philippines and creating new job opportunities in the sector. The Philippines telecoms sector has tremendous potential, and we look forward to being part of its future,” said Suresh Sidhu, CEO of EdgePoint.

PLDT said the closing of the transactions will be staggered based on the number of towers being transferred, with the first closing expected in May 2022 and the last closing by the fourth quarter of 2022.

UBS AG acted as exclusive financial adviser to PLDT and Smart on this transaction. —VBL, GMA News