The Asia-Pacific telecoms industry saw a slowdown in M&A activity in 2022 amid turbulent economic headwinds. Even so, the Philippines registered the region’s largest wireless M&A deal value of $3.1 billion across just four transactions, reports S&P Global Market Intelligence.
One of the key drivers of this success was the strategic tower asset divestments by the Philippines’ two incumbent mobile operators, PLDT and Globe Telecom.
Responding to the pressures of rising inflation and elevated borrowing costs, as well as the competitive landscape reshaped by new entrant DITO Telecommunity, both companies sold more than half of their respective tower assets.
PLDT’s ambitious divestment strategy involved selling 5,907 towers in April 2022 to Comworks Infratech (a subsidiary of Malaysia’s EdgePoint Infrastructure) and ISOC edotco Towers, owned by Malaysia’s edotco Group. The latter transaction, valued at $1.47 billion, emerged as the largest announced tower deal not just in the Philippines, but in the entire Asia-Pacific region for 2022.
Meanwhile, Globe Telecom announced the sale of over 5,500 towers in August 2022, amounting to approximately $1.29 billion. This transaction further underscored the strategic importance of tower divestment. As Globe Telecom CFO Rizza Maniego-Eala noted, that monetization was well-timed, helping to keep the company’s balance sheet healthy amid a rising interest rate environment.
Those sales, aimed at securing funds for debt servicing, special dividends, and strategic realignment, significantly boosted M&A activity in the Philippines.
Tower companies rule the Philippines
The tower deals also drew significant foreign investment to the Philippine mobile industry, signalling expected strong growth. That surge in investments followed the Philippine government’s decision in 2019 to shift from an operator-captive model to a tower-company-led industry.
The government’s ambitious plans to support the growing number of mobile subscribers in the country involve the construction of 50,000 new towers, for which an unspecified timeline has been set. The tower deals by PLDT and Globe Telecom in 2022 have therefore effectively positioned the majority of Philippine towers under the control of tower companies, significantly influencing the landscape of the telecoms industry.
In the broader Asia-Pacific region, the M&A environment remained challenging with just 26 deals announced, cumulatively valued at $8.64 billion. Nevertheless, operators adopted resilience strategies, including tower asset divestment, to provide necessary liquidity for debt servicing and capital expenditure reduction.