PLDT Group announces P77-B towers deal (Sabong News)

Smart Communications, Inc. and Digitel Mobile Philippines, Inc. on Tuesday, April 19, signed a landmark Sale and Purchase deal for P77-billion worth of 5,907 telecom towers and related passive telecom infrastructure. The P77 billion transaction price makes this deal the largest ever acquisition of assets in the Philippines by international investors. The winning bidders, a subsidiary of edotco Group and a subsidiary of EdgePoint (TowerCos), are backed by international groups with extensive experience in the telecom tower space. Both groups will bring to bear global best practices and technologies in operating the towers which should translate into better network quality, higher resilience and faster recovery from typhoons and other natural calamities. The 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. (DBRG), a leading global digital infrastructure investment firm with over $45 billion in assets under management. Of the 5,907 towers being monetized, 2,973 towers located primarily in Luzon, Visayas and Mindanao will be acquired by ISOC edotco Towers, Inc. (subsidiary of edotco Group) and 2,934 towers located in Luzon by Comworks Infratech Corp. (subsidiary of EdgePoint). Concurrent with the execution of the Sale and Purchase Agreements, Smart also entered into Master Services Agreements with the TowerCos whereby Smart has agreed to lease back the towers sold in the transaction for a period of 10 years. In addition to space, the TowerCos will also be responsible for providing operations and maintenance services as well as power to the sites. Smart has secured competitive terms as the anchor tenant on the towers and expects to benefit from operational and capital expenditure savings. The sale and leaseback will be complemented by a new tower build commitment of 1,500 towers in total over the next few years. This arrangement solidifies Smart’s network quality and enhance its customer experience in the country. In addition to the intrinsic value of the towers, the transaction price reflects the business opportunities the assets will provide to the winning bidders, including the leaseback arrangement with Smart, the growth prospects from the towers acquired, as well as the new tower build commitment from Smart. Upon completion of the transaction, the winning bidders will become the largest common tower operators in the country. In addition to resulting in a significant gain on disposal for PLDT, the arrangement is also expected to be earnings accretive from the first full year post closing. “This partnership with experienced international tower companies represents another milestone in PLDT’s strategic transformation,” remarked PLDT Chairman Manuel V. Pangilinan. “We expect to reap benefits in terms of a valuation uplift and capital reallocation with PLDT applying the proceeds to deleverage, further invest in the network, and return cash to shareholders via a special dividend,” he elaborated. “Our TowerCo partners, selected after a thorough process, will provide the Group with the infusion of global best practices and innovative solutions,” according to PLDT and Smart President and CEO Alfredo S. Panlilio. “PLDT is now even better positioned to continue our journey towards service excellence and best-in-class customer experience, making us the telco of choice in the Philippines,” he added. “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,” noted Adlan Tajudin, CEO of edotco Group. “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,” he explained. Closing of the transaction will be staggered based on number of towers being transferred, with the first closing expected in May 2022 and the last closing by fourth quarter, 2022. UBS AG acted as exclusive financial adviser to PLDT and Smart on this transaction.