Globe announced that it received board approval to sell over 7,000 towers in what is to be the largest ever tower sale and leaseback deal in the Philippines.
In a company disclosure, Globe said the tower assets offered for sale are comprised of 79% ground-based towers and 21% rooftop towers. The sale has been grouped into three distinct portfolios assigned to three different tower companies representing local and international groups.
Globe said it expects to raise a significant amount of capital over the next few quarters by executing these transactions. Of the total proceeds, approximately 75% will be used to fund capital expenditures to support ongoing network expansion and sustain industry-leading network consistency and reliability scores. The balance of 25% will be earmarked to cover 2023 debt servicing requirements.
Globe said that this will significantly improve the overall health of its balance sheet and provide sufficient flexibility to properly compete in a dynamic market as well as further expand its digital ecosystem.
As the biggest milestone of this initiative, Globe 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.
The first portfolio being sold consists of 2,180 telecom towers in Luzon, which will be acquired by MIESCOR Infrastructure Development Corp. (MIDC) for a total consideration of 26 billion pesos and be leased back to Globe for an initial period of 15 years. The first close for this portfolio is targeted within the 3rd quarter of the year, with subsequent closings happening as and when closing conditions are met. MIDC is a joint venture between investment firm Stonepeak and the country’s largest electric distribution utility company, Meralco.
The second portfolio consisting of 3,529 towers will be sold to Frontier Tower Associates Philippines Inc. for 45 billion pesos and also leased back over an initial period of 15 years. The first closing target for this portfolio is set for the late third quarter, with subsequent closings happening as and when closing conditions are met.
Globe is also in advanced discussions 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 comprised of towers located in the Visayas and Mindanao islands. Globe expects to sign the sale and leaseback agreement with this tower company within the third quarter, with the first closing happening within the 4th quarter of the year.
“These expanded long-term relationships with the tower companies show Globe’s commitment to help improve the Philippines’ 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,” said Ernest Cu, Globe President and CEO.
“We are very pleased with this landmark deal with Globe that marks a critical milestone in MIDC’s strategy to enter digital infrastructure space, which plays a pivotal role in driving economic growth and social well-being through digital inclusion. This also gives 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,” MIDC Chairman, Ray Espinosa stated.