Globe to sell over 7K towers to fund capex

·3 min read

AYALA-LED Globe Telecom announced Friday, Aug. 12, 2022, that it will sell its 7,000 towers across the country whose proceeds will be used to fund capital expenditures and pay maturing debts through 2023.

Of the total tower assets up for sale, 66 percent are located in Luzon, 19 percent in Mindanao and 15 percent in the Visayas. These are made up of 79 percent ground-based towers and 21 percent rooftop towers.

These assets have been grouped into three portfolios assigned to three different tower companies representing local and internal groups “with deep experience and expertise in telecom infrastructure, and engineering and construction,” the telco said in its disclosure to the local bourse.

Upon completion, Globe Telecom vice president for financial planning and analysis Juan Carlo Puno said, the transaction will represent “the largest ever tower sale and leaseback deal in the country.”

He said the sales and leaseback of the transaction will allow Globe to efficiently raise capital; redeploy capital from passive infrastructure to active equipment; improve balance sheet health; and leverage expertise of tower companies. Such initiative is also in support of the government’s tower sharing policy.

Puno specifically said 75 percent of the proceeds will be spent on capex while the balance of 25 percent will be used for debt maturing payments.

Three portfolios

The first portfolio consists of 2,180 telecom towers and related passive telecom infrastructure for over P26 billion. These towers are located in Luzon, and will be acquired by MIESCOR Infrastructure Development Corp. (MIDC), and leased back to Globe for an initial period of 15 years.

Globe estimates the pre-tax transaction gain to be over P10.6 billion.

MIDC is a joint venture between MIESCOR, a subsidiary of Manila Electric Company and Stonepeak. The transaction documents were signed on Aug. 11 with first closing targeted in September this year.

The second portfolio consisting of 3,529 towers, will be sold to Frontier Tower Associates Philippines Inc. (Frontier Towers) for P45 billion, and also leased back over an initial period of 15 years. Globe estimates the pre-tax transaction gain to be P15 billion. The deal was signed on Aug. 11 with first closing targeted in the late third quarter of the year or in early fourth quarter.

Globe 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.

Puno said the telco 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.

With the sale of these tower assets Globe is left with around 4,000 to 5,000 towers with a sizeable chunk considered as strategic to the telco’s business.

First half earnings

Globe closed the first half of 2022 with a consolidated revenue of P78.9 billion, up four percent year-on-year.

The strong revenue performance was above the growth rates before the pandemic, fueled by the solid contribution of data-related products and services across mobile and corporate data.

The firm spent P50.5 billion in capex, surpassing last year’s spending by 17 percent.

A large portion of the capex or 84 percent was allocated for data requirements to meet consumer’s growing demand for data.

The telco’s net income reached P19.7 billion, 51 percent higher than the P13 billion reported in the similar period in 2021.