Globe Telecom, a company based in the Philippines, has completed the sale of 154 towers to Miescor Infrastructure Development Corporation (MIDC) for PHP 13.5 billion (USD 242 million).
The tower transfer is a component of Globe's deals with MIDC and Frontier Tower Associates Philippines, involving a total of 5,709 towers for PHP 71 billion, finalized in August 2022.
Capitalizing on Tower Companies
The company stated that this sale will help Globe raise capital efficiently, shift capital from passive infrastructure to active equipment, improve its balance sheet, and benefit from the expertise of tower companies.
By selling their towers, Globe can quickly generate funds without resorting to debt or equity financing. This can be advantageous for funding expansion projects, debt reduction, or other strategic initiatives without increasing financial leverage.
Investing in active equipment, such as upgrading network technologies or improving service offerings, can enhance Globe's competitive edge. Active equipment investments directly contribute to improving network performance, capacity, and service quality, which are critical factors in retaining and attracting customers.
Selling passive infrastructure assets like towers can lead to a reduction in long-term debt and overall liabilities, thereby strengthening Globe's balance sheet. A healthier balance sheet enhances the company's financial stability, creditworthiness, and investor confidence, potentially leading to better borrowing terms and lower financing costs in the future.
Tower companies typically specialize in managing and operating telecommunications infrastructure efficiently. By partnering with or selling to these companies, Globe can leverage their expertise to optimize tower operations, reduce maintenance costs, and potentially access shared infrastructure resources. This allows Globe to focus on its core competencies while benefiting from the specialized knowledge and resources of tower companies.
A Strategic Move
So far, Globe has transferred 1,348 out of 2,180 towers to MIDC, and 2,214 out of 3,529 towers are set to be acquired by Frontier Towers.
Operators worldwide have been selling their tower assets to avoid costly maintenance responsibilities, pay off debts, and finance expansions in other areas of their operations. Thus, tower companies have been quick to acquire these passive assets.
