PLDT Group pioneers tower sharing in the Philippines

Of the 5,907 towers being monetized, 2,973 towers located primarily in Luzon, Visayas and Mindanao will be acquired by ISOC edotco Towers, Inc. (subsidiary of edotco Group) and 2,934 towers located in Luzon by Comworks Infratech Corp. (subsidiary of EdgePoint).

Concurrent with the execution of the Sale and Purchase Agreements, Smart has also entered into Master Services Agreements with the TowerCos whereby Smart has agreed to lease back the towers sold in the transaction for a period of 10 years. In addition to space, the TowerCos will also be responsible for providing operations and maintenance services as well as power to the sites. 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. This arrangement will further solidify Smart's superior network quality and enhance the best customer experience in the Philippines.

The transaction price of PHP 77 billion makes this deal the largest ever acquisition of assets in the Philippines by international investors. In addition to the intrinsic value of the towers, the transaction price reflects the attractive business opportunities that the assets will provide to the winning bidders including the leaseback arrangement with Smart, the growth prospects from the towers acquired, as well as the new tower build commitment from Smart. Upon completion of the transaction, the winning bidders will become the largest common tower operators in the country.

In addition to resulting in a significant gain on disposal for PLDT, the arrangement is also expected to be earnings accretive from the first full year post closing.

Commenting on the transaction, PLDT Chairman Manuel V. Pangilinan said, "This partnership with experienced international tower companies represents another milestone in PLDT's strategic transformation. We expect to reap benefits in terms of a valuation uplift and capital reallocation with PLDT applying the proceeds to deleverage, further invest in the network, and return cash to shareholders via a special dividend."

PLDT and Smart President and CEO Alfredo S. Panlilio added, "Our TowerCo partners, selected after a thorough process, will provide the Group with the infusion of global best practices and innovative solutions. PLDT is now even better positioned to continue our journey towards service excellence and best-in-class customer experience, making us the telco of choice in the Philippines."

Adlan Tajudin, CEO of edotco Group, said, "This transaction presents a highly strategic acquisition for edotco as it diversifies and strengthens our pan-Asian platform with exposure to a nascent, high-growth market with strong governmental support. With an established platform in the Philippines, edotco can play an instrumental role in developing the nation's digital economy infrastructure while accelerating its organic and inorganic growth strategy."

Suresh Sidhu, CEO of EdgePoint, concluded, "EdgePoint is delighted and honored by PLDT's faith in our capabilities. We look forward to working with PLDT in true partnership. We also look to bring to bear the vast experience of our local partners, Comworks Inc. and SMS Global Technologies Inc. We are committed to building a world class operation to expand next-generation connectivity solutions, bridging the digital divide in the Philippines and creating new job opportunities in the sector. The Philippines telecoms sector has tremendous potential, and we look forward to being part of its future."

Closing of the transaction will be staggered based on number of towers being transferred, with the first closing expected in May 2022 and the last closing by Q4 2022.

UBS AG acted as exclusive financial adviser to PLDT and Smart on this transaction.