GLOBE TELECOM, Inc. has closed deals to sell 213 telecommunication towers to Frontier Tower Associates Philippines, Inc. and MIESCOR Infrastructure Development Corp. (MIDC) for around P2.6 billion.
“The business of Globe is a capital-intensive one and this transaction that we initiated with tower companies has proven to be a great complement to our rollout of critical infrastructures to achieve wider coverage and consistency of service across the country,” said Rosemarie Maniego-Eala, chief finance officer of Globe, in a statement on Wednesday.
In a regulatory filing, the network operator said that 113 of the towers closed on Tuesday were sold to Frontier Tower for a total cash consideration of P1.4 billion.
It added that 77% of the 113 towers are ground-based and 23% are rooftop-based located in Luzon, Visayas, and Mindanao.
The latest deal closing brings the total received by Globe from Frontier Tower to around P26.6 billion for 2,094 towers out of the 3,529 acquired by the latter.
“The handover of this fourth batch of towers is another important step in our journey towards delivering stronger connectivity and sustainable, inclusive economic growth to the people of the Philippines,” Frontier Tower Chairman and Chief Executive Officer Patrick Tangney said.
Meanwhile, Globe and MIDC — a joint venture between Manila Electric Co. subsidiary MIESCOR and investment firm Stonepeak — closed on Aug. 15 the fourth tranche of their tower deal comprising 100 towers for P1.2 billion.
The tower assets transferred to MIDC are composed of 64% ground-based towers and 36% rooftop towers.
With the recent closing, MIDC is now in control of 1,120 towers from Globe out of the 2,180 towers that are covered by the P26-billion sale-and-leaseback deal signed on Aug. 11 last year.
“Each transitioned tower signifies a step toward building a robust and widespread digital ecosystem. Our journey is a collective effort, and our commitment to advancement remains steadfast, one tower at a time,” said MIDC President and Chief Executive Officer Helen Grace T. Marquez.
MIDC Chief Operating Officer Ricky Steyn said in a separate press release that the newly transferred assets will help in optimizing the company’s operational efficiency.
“As we integrate these towers into our system, we are streamlining our processes to provide seamless connectivity experiences for our customers. Our core focus remains on delivering quality, reliability, and innovation,” Mr. Steyn added.
CREDITSIGHTS RATINGMeanwhile, credit analyst CreditSights has maintained its “market perform” recommendation on Globe, citing the weakness of its broadband segment.
“Despite stable first-half earnings and lower capital expenditure (capex) spending, improvement in leverage has not yet played out as we had expected due to a challenging telecom environment and continued weakness in the fixed wireless broadband segment,” CreditSights said.
Globe has earmarked $1.38 billion or P71.5 billion as capex for 2023. During the January-to-June period, the company used P37.7 billion as capital spending.
CreditSights said Globe is seen to have improved credit over the next two quarters due to the tower sales.
“We see a mildly improving credit outlook aided by residual tower sales and lower capex that outweighs a challenging operating environment,” it said.
CreditSights said that it is anticipating the residual P47.2 billion of tower sale closures through the second half to “boost liquidity and lessen the need for additional debt incurrence.”
Data from CreditSights showed that Globe has four tower sale-and-leaseback deals, which comprise 7,506 towers for a total purchase price of P96.6 billion.
The other companies it has tower sale arrangements are Phil-Tower Consortium, Inc. and Unity Digital Infrastructure, Inc.
CreditSights has also maintained its expectation for low-single-digit EBITDA (earnings before interest, taxes, depreciation, and amortization) growth with second-half growth seen to be modestly higher versus the first half.
“Management has already begun transiting fixed wireless subscribers to wired and focusing more on the wired offering since the end of 2021,” it said.
“It expects its fixed wireless broadband subscriber net losses to stabilize by the third quarter, which should buoy the overall broadband business,” it added.
On Wednesday, shares in Globe went up by P3 or 0.16% to P1,918 apiece. — Justine Irish D. Tabile
