Ayala-led Globe Telecom plans to spin off its cellular tower assets to an independent tower company, aiming to speed up the deployment of cellular towers and address poor mobile connectivity in the Philippines.
This came on the heels of a new common tower policy announced by the Duterte administration, under which the government plans to tap a third party group to finance and build independent cell towers, which will then be leased to telecom operators such as PLDT, Globe and new entrants.
In a disclosure to the Philippine Stock Exchange on Thursday, Globe said it’s looking at divesting all or part of its tower assets to an independent tower company as part of its network expansion and optimization plan. To date, Globe has over 8,000 cell towers nationwide.
For its part, Globe has initiated discussions with third party players for this project, which seeks to address lack of towers in the country, in turn identified as a major constraint to mobile internet connectivity.
“We have been allocating over 30 percent of our total revenues to capital expenditure for the past five years and this level will be sustained over a period of time. An independent tower company will be a win-win solution. lt will monetize assets for capex (capital expenditure) use and help maintain our consistent dividend policy. ln addition, this greatly helps President Duterte’s initiative to open the telco industry to new players,” Globe president and CEO Ernest Cu said.
“The plan is for these towers to be open for lease to new and existing players. This effectively lessens the barriers that a new entrant has to endure because they will not have to spend the capex to build towers and instead focus on rolling out the necessary network equipment. This significantly reduces the time needed for a new player to rollout given the 25 permits and up to eight months required to build one cell tower. Our move is also consistent with our position of being open to more competition in the telecom mu nications industry,” he said.
To date, the Philippines has one of the lowest tower densities in the world, with less than 20,000 towers serving a population of 100 million people. ln contrast, Vietnam, with a population of 90 million, has 70,000 towers for its telecommunications needs. Bangladesh and Pakistan have
more towers than the Philippines with over 30,000 each.
About 50,000 more towers are seen needed to be built in the future to optimize network deployment in the country.
But tower companies generally want multlple operators as locators, effectively reducing the cost for all locators and increasing the return for the tower company. Globe plans to work with these tower companies in determining the appropriate locations for all prospective towers.
Globe nonetheless sees rough times ahead to improve services and keep up with the rapid data consumption growth of its customers.
Source: http://business.inquirer.net/245589/globe-spin-off-cellular-tower-assets