Globe to spin off cellular tower assets

Ayala-led Globe Telecom plans to spin off its cellular tower assets to an independent tower company, aiming to speed up the deployment of cellular towers and address poor mobile connectivity, a big area of concern for the Duterte administration.

This move came on the heels of a new common tower policy announced by the government, under which the state plans to tap a third party to finance and build independent cell towers, which will then be leased to telcos.

In a disclosure to the Philippine Stock Exchange on Thursday, Globe said it was looking to divest all or part of its tower assets to an independent tower company as part of its network expansion and optimization plan. To date, Globe has over 8,000 cell towers nationwide.

Globe has initiated discussions with third party players for this project, which seeks to address the lack of towers which has been identified as a major constraint to mobile internet connectivity.

“We have been allocating over 30 percent of our total revenues to capital expenditure for the past five years and this level will be sustained over a period of time. An independent tower company will be a win-win solution. It will monetize assets for capex (capital expenditure) use and help maintain our consistent dividend policy. In addition, this greatly helps President Duterte’s initiative to open the telco industry to new players,” Globe president and CEO Ernest Cu said.

“The plan is for these towers to be open for lease to 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 focus on rolling out the necessary network equipment. 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. Our move is also consistent with our position of being open to more competition in the telecommunications industry,” he said.

To date, the Philippines has one of the lowest tower densities in the world, with less than 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 have more towers than the Philippines with over 30,000 each.

About 50,000 more towers are seen needed to be built to optimize network deployment in the country.