PLDT Inc. Closes Deals with edotco Group and EdgePoint Worth ₱77 Billion

On Tuesday, major telco company PLDT Inc. announced that it entered into agreements with edotco Group and EdgePoint for the sale and leaseback of its 5,907 telecom towers. The deals amounted to ₱77 billion, which will then be utilized to repay debt, fund major cash requirements, and pay special dividends of up to ₱9 billion.

PLDT subsidiaries Smart Communications, Inc. and Digitel Mobile Philippines, Inc. likewise signed the sale and purchase deals as noted in its disclosure to the stock exchange. The 5,907 towers, accounting for almost half of PLDT’s total tower portfolio, are spread across the Philippines. Of the total, 2,973 will be acquired by ISOC edotco Towers, Inc., a subsidiary of edotco Group, while the remaining 2,934 will go to Comworks Infratech Corp., a subsidiary of EdgePoint.

PLDT Chief Finance Officer Anabelle L. Chua explained that the proceeds from the deal will be used to prepay ₱27.5 billion in debt maturing this year. “We do not need to borrow ₱24.5 billion that will be used for capital expenditures and other investment requirements,” Chua elaborated. “Originally, based on our plans, we would have had to borrow; but this time, we can avoid doing that with the proceeds that we’ll generate from this transaction.”

“So with the ₱52 billion that’s largely being used to deleverage the company, we should enjoy savings on our financing costs. The estimate here of ₱2.6 billion is calculated at the assumption of a 5% interest rate per annum,” she added. Due to the number of towers being transferred, staggered closing is expected by PLDT. “First closing is expected in May 2022 with final closing by the fourth quarter,” said Chua.

The company received bids “north of the ₱50-billion mark” earlier in March, according to PLDT Chairman Manuel V. Pangilinan. “I think that’s partly on the back of the good condition of our towers; partly because of the good credit standing of PLDT, I would like to believe, and partly because we had good financial advisors,” affirmed Pangilinan, when asked about the higher valuation for the towers.

“I think, on the whole, the timing was perfect, and also this is the first ever towers sale to be achieved here in this country, so in many respects, it had the benefit of a first mover advantage,” he added. PLDT furthered that edotco Group and EdgePoint will most likely “bring to bear global best practices and technologies in operating the towers which should translate into better network quality, higher resilience, and faster recovery from typhoons and other natural calamities.”

Smart has also agreed to lease back the towers sold in the transaction for a period of 10 years. “Smart has secured competitive terms as the anchor tenant on the towers and expects to benefit from operational and capital expenditure savings. The sale and leaseback will be complemented by a new tower build commitment of 1,500 towers in total over the next few years,” noted PLDT.

Source: BusinessWorld