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Singtel JV to sell over 7,000 towers in the largest sale and leaseback transaction in the Philippines

·3-min read

Upon its completion, the transaction will represent the largest ever tower sale and leaseback deal in the Philippines.

Globe Telecom, a leading digital platform in the Philippines and whose principal shareholders are Ayala Corporation and Singapore Telecommunications (Singtel), has obtained board approval to sell over 7,000 towers.

Of the amount, 66% are located in Luzon, 19% in Mindanao and 15% in Visayas.

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

The companies represent local and international groups that come with deep experience and expertise in telecom tower infrastructure, and engineering and construction.

Upon its completion, the transaction will represent the largest ever tower sale and leaseback deal in the Philippines.

In its statement on Aug 12, Globe says it expects to raise a “significant amount” of capital over the next few quarters from this transaction. About 75% of the proceeds will be used to fund capital expenditures.

The balance of 25% will cover its 2032 debt servicing requirements.

Under this initiative, Globe has signed two sale and leaseback agreements for two portfolios consisting of 5,709 telecom towers and related passive telecom infrastructure for over 71 billion pesos ($1.75 billion).

The first portfolio will comprise 2,180 telecom towers in Luzon, which will be acquired by MIESCOR Infrastructure Development Corporation (MIDC) for a consideration of 26 billion pesos. The towers will be leased back to Globe for an initial period of 15 years.

The first close for this portfolio is targeted to happen within the third quarter of the year.

The pre-tax transaction gain from the first portfolio is estimated to be at 10.6 billion pesos.

The second portfolio consisting of 3,529 towers will be sold to Frontier Tower Associates Philippines Inc. (Frontier Towers) for 45 billion pesos, and also leased back over an initial period of 15 years.

The first closing target for this portfolio is targeted to happen in late third quarter, with subsequent closings happening as and when closing conditions are met.

The estimated pre-tax transaction gain is said to be at 15.0 billion pesos.

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

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.

UBS AG acted as exclusive financial advisor to Globe on the transaction.

“We have 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,” says Rizza Maniego-Eala, Globe’s chief finance officer.

“These expanded long-term partnerships with the tower companies show Globe’s commitment to help improve the Philippines’s internet condition, as well as our desire to have as many Filipinos enjoy the benefits of having access to reliable internet. We also believe that through these monetization efforts, Globe will be able to further improve overall operational efficiency, allowing us to serve our customers better, and supporting our goal of enabling the digital lives of Filipinos,” says Ernest Cu, Globe’s president and CEO.

As at 3.13pm, shares in Singtel are trading 1 cent higher or 0.38% up at $2.63.

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