Saturday, June 22, 2024

Globe selling 7,000 towers in largest sale and leaseback deal in PH

Globe Telecom announced on Friday, Aug. 12, that it is selling over 7,000 towers, of which 66% are located in Luzon, 19% in Mindanao and 15% in Visayas.

Photo shows Globe president and CEO Ernest Cu (4th from left) and MIDC chairman Ray C. Espinosa (5th from left) with officials from Globe, MIDC, and Stonepeak

The tower assets up for sale are made up of 79% ground-based towers and 21% rooftop towers, and have been grouped into three distinct portfolios assigned to three different tower companies representing local and international groups.

Upon completion, Globe said the transaction will represent the largest ever tower sale and leaseback deal in the country.

The Ayala-owned telco said it expects to raise a significant amount of capital over the next few quarters from the transaction. Of the total proceeds, approximately 75% will be used to fund capital expenditures, to support ongoing network expansion, and sustain network consistency and reliability scores. The balance of 25% will be earmarked to cover our 2023 debt-servicing requirements.

Globe said it has already signed two sale and leaseback agreements for two portfolios consisting of 5,709 telecom towers and related passive telecom infrastructure worth P71 billion.

The first portfolio being sold consists of 2,180 telecom towers in Luzon, which will be acquired by MIESCOR Infrastructure Development Corporation (MIDC) for a total consideration of P26 billion and leased back to Globe for an initial period of 15 years at a monthly rate of P100,000 per tower.

Globe said the longer lease tenor provides the company with more stability and certainty with regard to the use of these passive infrastructures, which is critical to its core telco service. The telco also provided a commitment for additional 750 build-to-suit towers over a period of four years.

The first close for this portfolio is targeted to happen within the third quarter of the year, with subsequent closings happening as and when closing conditions are met.

The deal marks a significant milestone for MIDC, which aspires to become a major player in the common tower space by servicing the country’s leading mobile network operators. MIDC holds a license from the Department of Information and Communications Technology (DICT) to operate as an independent tower company.

The company is backed by MIESCOR’s expertise in the engineering, procurement, and construction business of global infrastructure investor Stonepeak. The two partnered in late 2021 to actively pursue telco tower opportunities in the region.

Meralco president and CEO Ray C. Espinosa said: “We are very pleased with this landmark deal with Globe that marks a critical milestone in MIESCOR’s strategy to enter the digital infrastructure space, which plays a vital role in driving economic growth and social well-being through digital inclusion.”

“This also gives us the momentum to pursue more opportunities that will help us achieve our aspiration to become a trusted telco tower operator in the Philippines and eventually, a market leader in the digital infrastructure business,” Espinosa, who also sits as chairman of MIDC, added.

Photo shows (from left) Rizza Maniego-Eala, chief finance officer of Globe; Ernest Cu, chief executive officer of Globe; Patrick Tangney, CEO of Frontier Towers; and Michael de Guzman, managing director, KKR (Kohlberg Kravis Roberts and Co)

The second portfolio consisting of 3,529 towers will be sold to Frontier Towers for P45 billion, and also leased back over an initial period of 15 years.

Globe said it is also in advanced discussion with one other tower company for the potential sale and leaseback of an additional 1,350 telecom towers and related passive telecom infrastructure. This last portfolio is made up of towers located in Visayas and Mindanao.

Globe expects to sign the sale and leaseback agreement with this tower company within the third quarter, with first closing happening within the fourth quarter of the year.

“We’ve always been looking for ways to monetize our tower assets and this record-breaking initiative marks our continued commitment to optimize our capital raising efforts and further strengthen the balance sheet as we seek to capitalize on opportunities in the telecommunications sector and complementary services,” said Rizza Maniego-Eala, Globe chief finance officer.

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