PLDT mobile subsidiaries Smart Communications and Digitel Mobile Philippines have entered into separate sales agreements worth $1.5 billion to sell over 5,900 telecom towers and related passive telco infrastructure to ISOC edotco Towers and EdgePoint subsidiary Comworks Infratech.
Under the two deals, ISOC edotco will acquire 2,973 towers located on the three largest islands of the Philippines: Luzon, Visayas and Mindanao, while Comworks will take over 2,934 towers located in Luzon.
The towers sold will be leased back for a period of ten years, reducing Smart’s capex and opex by about 10% annually from last year’s 30 billion peso core profit. PLDT is expected to save 2.6 billion pesos in financing costs and cut its gross debt of $5 billion (as of the end of 2021).
With the Philippines prone to natural calamities such as typhoons and earthquakes, the agreement will lead to better network quality, higher resilience, and faster recovery in times of natural phenomena bearing global best practices and technologies, said PLDT.
“We expect to reap benefits [of this partnership] 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,” said PLDT chairman Manuel V. Pangilinan in a press release.
Suresh Sidhu, CEO of EdgePoint, said the company was 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 tower deal marks the Philippines’ largest-ever acquisition of assets by international investors.
The transaction will be staggered, with the first closing expected in May 2022 and the final closing at the end of the year.
Last year, PLDT opened the idea of selling non-strategic towers to maintain its position as a dominant network in the country. The telco’s financial advisers’ estimation of half of its towers was at $800 million, potentially reaching $1 billion.