PLDT sells, leases back its cell sites in P77-B deal

PLDT Inc. clinched a landmark P77-billion sale and leaseback agreement for its 5,907 telecom towers on Tuesday as it seeks to cut its debts while pushing for better connectivity for customers.

The transaction, which is deemed as the biggest purchase of assets in the Philippines by foreign investors, would allow PLDT to sell the cell sites to tower companies—edotco Group unit ISOC edotco Towers Inc. and EdgePoint subsidiary Comworks Infratech Corp.—and then rent them for 10 years.

Proceeds of the transaction would go to debt prepayment of P27.5 billion, declaration of special dividend to stockholders of up to P9 billion and network investment. The sales and leaseback deal is complemented by the building of 1,500 new towers in the next few years with the partner tower companies.

The transaction is also seen resulting in income accretion of P3 billion annually on average over the 10-year period for the company.

Higher than book value

The value of the deal is markedly higher than the towers’ book value of P23 billion and the earlier bids amounting to about P50 billion. PLDT chair Manuel Pangilinan attributed this to the “good condition” of the assets and the company’s credit standing, among others.

ISOC edotco was set to acquire 2,973 towers located across the country for P42 billion. The remaining towers, which are all located in Luzon, were bought by Comworks Infratech for P35 billion.

The transaction would be closed on a staggered basis, depending on the number of towers being transferred. The first closing is slated for next month, with the expectation that the deal will be completed this year.

Under the deal, the subsidiaries of edotco Group and Edgepoint would be operating and maintaining the towers.

“Our towerco (tower company) partners, selected after a thorough process, will provide the group with the infusion of global best practices and innovative solution,” PLDT and Smart president and CEO Alfredo Panlilio said.

Asian tower firms

The edotco Group operates over 54,000 towers in nine Asian countries while EdgePoint has about 10,000 towers across Indonesia and Malaysia.

“This transaction presents a highly strategic acquisition for edotco as it diversifies and strengthens our pan-Asian platform with exposure to a nascent, high-growth market with strong governmental support,” edotco Group CEO Adlan Tajudin said.

“We are 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,” EdgePoint CEO Suresh Sidhu added.

Investment banking firm UBS AG served as the financial adviser of PLDT and Smart for this deal. INQ