Globe Telecom announced it has initiated discussions with independent third parties for the establishment of a tower company to help speed up the build and deployment of cellular towers in the Philippines.
Globe is looking at divesting all or part of its tower assets to independent tower companies as part of its network expansion and optimization plan. To date, Globe has over 8,000 cell towers nationwide.
Globe President and CEO Ernest Cu said the cellco has been allocating over 30% of its total revenues to capex for the past five years and will sustain that level over a period of time, but that an independent tower company would be a “win-win” solution.
“It will monetize assets for capex use and help maintain our consistent dividend policy,” Cu said “In addition, this greatly helps President Duterte’s initiative to open the telco industry to new players.”
Tower companies generally want multiple operators to co-locate in their towers because it effectively reduces the cost for all locators and increases the return for the tower company. Cu said the plan is to open the towers for lease to both new and existing players.
“This effectively lessens the barriers that a new entrant has to endure because they will not have to spend the capex to build towers, and instead [can] focus on rolling out the necessary network equipment,” he said “This significantly reduces the time needed for a new player to roll out, given the 25 permits and up to eight months required to build one cell tower.”
However, Globe still sees rough times ahead to improve services and keep up with the rapid data consumption growth of its customers, Cu added. “We hope to continue working with the government to reduce the red tape that is currently being encountered in the permitting and right of way process. The only reason we are able to keep up with the demand for wireless data is because of the ultra-high capacity nature of our sites.”
Globe has been ramping up its capex over the past five years, from P26.8 billion in 2012 to P42.5 billion in 2017. Globe plans to spend P43.5 billion on capex in 2018. Globe says it has been averaging 31% annually of capex spending to total revenues.
According to Globe, the Philippines has one of the lowest tower densities in the world, with under 20,000 towers serving a population of 100 million people. In contrast, Vietnam, with a population of 90 million, has 70,000 towers for its telecommunications needs. Bangladesh and Pakistan has more towers than the Philippines with over 30,000 each.
Globe says the lack of towers has been identified as a constraint to mobile internet connectivity. Approximately, 50,000 more towers will need to be built in the future to optimize network deployment.