PLDT selling 50% of its cell towers for more than P50b
The telecommunications company, owned by Manny V. Pangilinan, is selling 6,000 of its (roughly) 12,000 cell towers for what it calls “north of P50 billion”.
PLDT [TEL 1830.00 4.57%] says that it ran a “disciplined and tedious process” to obtain bids from 19 bidders before trimming the list down to just six bids.
From that batch of six bids, that TEL describes as “common tower players globally”, TEL will award two packages of 3,000 towers.
TEL referred to the purchase contracts as a “symbiotic relationship”, where TEL will sell the ultimate ownership of the towers to the two global tower companies, but lease the towers back from those companies at a price and term that will be negotiated before the sale is complete.
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In business, this is called a “sale lease-back”; it lets the company (TEL) book income for the sale of the towers (that’s the “north of P50 billion” part), while still enjoying the continued use of those towers for many years to come.
The two companies that are ultimately picked to purchase the tower assets will gain control of income-generating assets that are already at full utilization.
These types of deals usually come with pretty lengthy lease contracts, too, so TEL will benefit from some cost certainty on the tower rental side while it frees up the income generated from the sale to plow into other, more profitable pursuits.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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