Globe sells and leases back over 5,000 telecom towers for P71B

Ayala-led telecommunications giant Globe Telecom Inc. on Friday announced it signed two sale and lease back deals involving over 5,000 telecom towers for P71 billion.

In a disclosure to the Philippine Stock Exchange, Globe said it signed the first deal with MIESCOR Infrastructure Development Corporation (MIDC) for the sale of 2,180 telecom towers and passive telecom infrastructure for over P26 billion.

Globe will then lease back the towers for an initial 15-year period.

MIDC, an independent tower company, is a joint venture between Meralco subsidiary MIESCOR and infrastructure and real estate investment firm Stonepeak.

The telco said it is expecting a pre-tax transaction gain of over P10.6 billion.

“This longer tenor provides Globe with more stability and certainty with regard to the use of this passive infrastructure, which is critical to its core telco service,” it said.

Globe expects “the first closing for the transaction to happen within the third quarter of the year with subsequent closings happening as and when closing conditions are met.”

The second transaction involves 3,529 telecom towers sold to Frontier Tower Associates Philippines Inc. for P45 billion, and also leased back to Globe for an initial period of 15 years.

“The first closing target for this portfolio is targeted to happen in the late third quarter, with subsequent closings happening as and when closing conditions are met.”

Globe also said it is in advanced discussion with one other tower company for the potential sale and leaseback of an additional 1,350 telecom towers and related passive telecom infrastructure.

“This last portfolio is made up of towers located in Visayas and Mindanao. Globe expects to sign the sale and leaseback agreement with this tower company within the third quarter, with first closing happening within the fourth quarter of the year,” it said.

In total, Globe is planning to sell 7,059 towers, of which 66% are located in Luzon, 19% in Mindanao and 15% in Visayas.

“The tower assets up for sale are made up of 79% ground-based towers and 21% rooftop towers, and have been grouped into three unique distinct portfolios assigned to three different tower companies representing local and internal groups with deep experience and expertise in telecom infrastructure, and engineering and construction,” the telco said.

“Upon completion, this transaction will represent the largest ever tower sale and leaseback deal in the country,” it said.

Globe said 75% of the expected amount to be raised from the transaction will fund its capital expenditure, support ongoing network expansion, and sustain industry-leading network consistency and reliability scores.

The remaining 25% will be allocated to cover the telco’s 2023 debt servicing requirements.

“This will significantly improve the overall health of Globe’s balance sheet and provide sufficient flexibility to properly compete in this dynamic market as well as further expand its digital ecosystem,” it said.

The sale and leaseback of towers by telcos is in line with the “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.

PLDT Inc., in April, announced the sale and leaseback of 5,907 towers for P77 billion to two tower companies.—AOL, GMA News