edotco eyeing the assets of the PLDT tower in the Philippines

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Edotco Group Sdn Bhd, a 63% subsidiary of AXIATA Group Bhd, is said to be in talks with PLDT Inc of the Philippines to acquire part of the latter’s telecom tower business, sources familiar with the matter told The Edge.

Although details are scarce, sources say the acquisition could be substantial, with edotco eyeing around 3,000 of PLDT’s 6,000 telecommunications towers that are up for sale.

It is understood that edotco could use its 51%-owned unit ISOC edotco Towers Inc – a joint venture with Philippines-based ISOC Infrastructure Inc – for the acquisition of PLDT’s telecommunications towers. ISOC edotco Towers was created in September 2019.

The Edge understands that a number of senior edotco brass are in the Philippines at the time of writing, but it remains to be seen how soon a deal could be signed.

A source familiar with the matter says the deal is “imminent”, adding that “from what I understand it (the acquisition) could close soon”.

There has also been talk of PLDT re-letting its towers to ISOC edotco Towers after the sale, but this remains conjecture at press time.

According to reports in the Philippines in mid-March, PLDT was divesting 50% of its tower assets – or 6,000 out of a total of 12,000 towers – valued at some PHP50 billion ($966 million or 4.06 billion of RM). PLDT chairman Alfredo Panlilio reportedly said the Philippine company had narrowed the initial 19 bids it received to six, and that the bidders were tower players who were “strong and well-funded entities” of the world. entire.

PLDT was looking to choose two companies – each acquiring 3,000 rounds – with the prize being awarded in the second quarter of the year, Dispatches said. UBS AG is expected to advise PLDT in connection with the sale. Final bids for the sale of the 6,000 telecom towers were reportedly received by PLDT on March 1 this year.

If edotco through its ISOC unit edotco Towers is one of the preferred bidders, Axiata may have to shell out around RM2 billion for the acquisition. Axiata is a 36.75% owned unit of the sovereign wealth fund Khazanah Nasional Bhd.

In addition to Axiata, edotco’s shareholders are INCJ Ltd (owned by Japan Investment Corp) with a 21.14% stake; Mount Bintang Ventures Sdn Bhd, which is a wholly owned unit of Khazanah Nasional, with a 10.57% stake; and Kumpulan Wang Persaraan (Diperbadankan) or KWAP with the remaining 5.29% stake, according to company research.

With such powerful shareholders, it is unlikely that edotco will have financing difficulties.

Meanwhile, Philippines-based ISOC Infrastructure is the vehicle for businessman Michael C Cosiquien, who is also a co-founder of Megawide Construction Corp, a $200 million company listed on the Philippine Stock Exchange. Cosiquien was listed by Forbes as one of the 50 richest people in the Philippines in 2020 with a net worth of US$175 million.

For its financial year ending December 2020, edotco recorded an after-tax profit of RM175.23 million on the back of RM1.88 billion in revenue. At the end of 2020, the telecom tower company had total assets of RM6.51 billion, total liabilities of RM2.73 billion and retained earnings of RM482.11 million.

In early March, edotco acquired approximately 1,000 towers from Indonesia’s PT XL Axiata Tbk for RM219 million, giving it a presence on all major Indonesian islands of Java, Sumatra, Bali, Sulawesi and Kalimantan, and in the east from Indonesia. PT XL Axiata is a 61.48% subsidiary of Axiata, the parent company of edotco.

With the acquisition of PLDT, edotco will have a portfolio of 50,000 owned and managed towers and a presence in nine markets across Asia – in Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka, Pakistan, the Philippines, Laos and Indonesia.

An edotco IPO has been mooted since January 2018, but has yet to take off.

Shares of Axiata were suspended last Friday pending the announcement of its merger with DiGi.Com Bhd. Axiata is a large company with a market capitalization of RM34.69 billion.

Makati-based PLDT, which is the Philippines’ largest telecommunications and digital services provider by market value, had a market capitalization of US$7.6 billion at the time of writing.

According to Bloomberg, PLDT shareholders include NTT DoCoMo Inc of Japan with a 20.35% stake, Philippine Telecommunications Investment Corp (12.05%) and JG Summit Holdings Inc (11.27%), the latter of which is controlled by the family of the late John L Gokongwei Jr, a renowned businessman. Hong Kong’s First Pacific Co Ltd holds a 3.54% stake in PLDT.

Reports from the Philippines indicate that PLDT is divesting its tower business to reduce its gross debt, which was pegged at $5 billion at the end of 2021.

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