KUALA LUMPUR (April 20): Axiata Group Bhd confirmed on Wednesday (April 20) that its 63%-owned subsidiary edotco Group Sdn Bhd’s 100%-owned unit ISOC edotco Towers Inc is buying 2,973 telecommunication towers and related assets in the Philippines from PLDT Group units Smart Communications Inc (SMART) and Digitel Mobile Philippines Inc (DMPI) for 42 billion Philippine pesos (RM3.42 billion) in a move which will help the buyer establish a platform to accelerate organic and inorganic growth.
According to Axiata’s Bursa Malaysia filings, Axiata’s share trade was halted between 9am and 10am on Wednesday in conjunction with the telecommunication towers purchase announcement.
"Both SMART and DMPI are part of PLDT Group, Philippines’ largest fully integrated telco company. Through its principal business group from fixed line to wireless, PLDT Group offers a wide range of telecommunications and digital services across the Philippines’ most extensive fiber optic backbone, and fixed line and cellular networks.
"PLDT is listed on the Philippine Stock Exchange and its American Depositary Shares are listed on the New York Stock Exchange,” Axiata said.
Axiata said ISOC edotco on Tuesday (April 19, 2022) entered into a sale and purchase agreement with SMART and DMPI for the acquisition of the telecommunication assets.
The transaction will be funded through a combination of internally generated funds and external funding, according to Axiata.
"Barring any unforeseen circumstances and subject to all approvals being obtained, the proposed acquisition of [the] PLDT tower assets is expected to be completed by Dec 31, 2022," Axiata said.
Axiata said that concurrent with the execution of the sale and purchase agreement, SMART also entered into a master service agreement with ISOC edotco on the leaseback of the telecommunication assets which are being sold to ISOC edotco.
In addition to the proposed leaseback transaction, ISOC edotco will build 750 build-to-suit (BTS) sites for leasing to SMART in the future.
"The committed  BTS, in addition to the existing 485 BTS orders that ISOC edotco has already secured from other MNOs (mobile network operators), will further strengthen edotco's position to benefit organically from the growing BTS demand and digital infrastructure needs in the country, driven by the increasing capacity and coverage requirements of [MNOs].
"Additionally, the enlarged platform will also enable ISOC edotco to be well placed for future inorganic growth opportunities in the Philippines, given its scale and operational track record. Following the transaction [to buy the telecommunication assets], it is anticipated that more tower opportunities would come to market as existing MNOs continue to move towards an asset-light model," Axiata said.
Besides helping ISOC edotco establish a platform to accelerate organic and inorganic growth, Axiata said the proposed acquisition of the Philippines telecommunication assets will give ISOC edotco, among others, exposure to a high-growth market.
"The transaction increases edotco's exposure to the stable, fast-growing emerging markets, while diversifying its portfolio from the frontier markets. In particular, the Philippines presents a unique high-growth opportunity in a nascent tower market with strong governmental support and significant infrastructure needs.
"With a more balanced portfolio of towers across the emerging and frontier markets, the growth profile of edotco is expected to be more sustainable and predictable, going forward. Post transaction, edotco will cement its position as the sixth largest (ITC) independent tower company globally and will be operating and managing a diversified portfolio of approximately 54,000 towers across Malaysia, Indonesia, the Philippines, Bangladesh, Pakistan, Cambodia, Myanmar, Laos and Sri Lanka," Axiata said.
Axiata's announcement on Wednesday (April 20, 2022) confirmed a report in The Edge Malaysia weekly April 4-10, 2022 edition that edotco Group via ISOC edotco had been planning an acquisition of a portion of PLDT's telecommunication tower business.
Quoting sources familiar with the matter, The Edge Malaysia weekly reported then that while the details were scarce, the acquisition could be a substantial one with edotco eyeing about 3,000 of PLDT's 6,000 telecommunication towers up for sale.
Axiata's share price rose on Wednesday (April 20, 2022) as trading resumed following Axiata's confirmation on the proposed transaction.
At 10.44am, Axiata's share price rose six sen or 1.67% to RM3.66, which values the group at about RM33.6 billion based on the company's 9.18 billion outstanding shares.
The stock was traded at between RM3.61 and RM3.69 so far on Wednesday.