Why do PLDT, Globe sell their towers?

The Philippines, despite improvements seen in internet connectivity for the past years, remains lagging in the global telco market.

One of Smart's towers

PLDT, Globe selling telco towers

Government officials previously said PLDT and Globe Telecom failed to build enough cell sites. The dominant operators, however, pinned their blame on the bureaucratic red tape for slow tower rollout.

Tables may have turned as just a few years later, these two major telcos have begun cutting their tower portfolio.

PLDT pioneers tower sharing

In April of this year, Pangilinan-led PLDT announced its bold move of disposing nearly of 6,000 telco towers for PHP 77 billion, with two foreign investors: Kuala Lumpur-based edotco Group and US-headquartered EdgePoint Infrastructure. The agreements also require that Smart would lease back the towers sold for a period of 10 years, freeing the wireless arm from operating and maintenance expenses.

Its chairman Manuel V. Pangilinan and CEO Alfredo S. Panlilio previously said selling almost half of PLDT's tower portfolio would allow the group to do the following:

• Capital reallocation
• Further invest in the network
• Return cash to shareholders via a special dividend
• Infusion of global best practices and innovative solutions
• Support the government's push for a healthy common tower market

Since then, PLDT has been transferring the ownership of towers to the winning bidders. Earlier in October, the company said it expects to complete the tower sale by the first quarter of 2023.

Once the deal is complete, edotco Group and EdgePoint Infrastructure would be "the largest common tower operators in the country," PLDT said.

Globe follows suit

In August, Globe then disclosed that it sealed deals with two tower companies for the acquisition of 5,709 towers for PHP 71 billion.

It bared that the group was also in "advanced discussion" with another firm for more than 1,000 towers.

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, said Rizza Maniego-Eala, chief finance officer of Globe.

Unloading its towers, Globe said this would enable them to pursue the following:

• 75 percent of the proceeds to finance Globe's network expansion
• The balance, meanwhile, will be used for its debt servicing requirements in 2023
• Save money as Globe would lease back the towers from the companies

The government has long been pushing for the establishment of a local tower sharing to improve telco services across the country. Aside from this, it also opened the market to one more major player, DITO Telecommunity.

For its part, DITO earlier said it also teamed up with tower companies to support its aggressive rollout.

What do you guys think?