Japan’s sole independent towerco JTOWER has accepted an offer from digital infrastructure investor DigitalBridge to acquire the company. The deal is now passed on to its shareholders before the deal is green lighted – the tender offer deadline of Thursday 10th October. Representative Director and President of the Company Atsushi Tanaka will continue to lead the new organisation, if the takeover is finalised.
A new market takes shape
JTOWER’s founder and president, Atsushi Tanaka, as well as Nippon Telegraph & Telephone Corp. and its mobile unit will tender their combined stake of roughly 26% to the take-private deal at ¥3,600 (US$24.46) per share, according to an exchange filing.
JTOWER has a varied ownership structure, with NTT-DOCOMO owning 21.6% and KDDI 2.5%, as Tanaka revealed during last year’s presentation session at TowerXchange Meetup Asia 2023. The Company will maintain its business alliance with existing capital and business alliance partners Nippon Telegraph and Telephone Corporation, NTT DOCOMO, INC., and KDDI CORPORATION following the takeover.
The announcement of DigitalBridge’s shock takeover comes after Japanese MNO Rakuten Mobile last week having announced a sell off of part of their mobile network to Macquarie Asset Management. Despite the transfer of tower assets not being specifically mentioned in the deal now appears part of a trend in Japan to monetise passive telecom infrastructure assets. JTOWER has been educating Japanese MNOs on the benefits of the independent towerco model and its shared infrastructure philosophy for many years.
TowerXchange estimates that there are 220,515 towers in the country, with Japan’s MNOs owning the vast majority of tower assets. Some 6,297 towers are owned by JTOWER in a deal which is seeing NTT sites being transferred in batches to the towerco.
Japan is one of the world’s most advanced mobile markets in term of 5G rollout, with four MNOs operating – namely DOCOMO, KDDI, SoftBank and new market entrant Rakuten (Rakuten’s network being based upon Open RAN technology).
The country’s operators have dipped their toes in the water of infrastructure sharing, but it remains of limited application. SoftBank Corp and KDDI launched 5G JAPAN in 2020, a joint venture promoting infrastructure sharing-based on the mutual use of base station assets held by KDDI and SoftBank to accelerate the rollout of 5G networks in rural Japan.
The country’s carriers are under pressure to expand coverage area for not only disaster response and rural areas on land, but also for the sky, sea, and outer space. To maintain and operate communication infrastructure in a stable manner with limited human resources presents itself as a key challenge Japan’s telecoms industry needs to address. JTOWER’s philosophy promoting shared infrastructure for both indoor and tower businesses, requires long term future investment. It therefore seems as if JTOWER has found its ideal investor to take its objectives further forward.
On the transaction, the company stated: "We expect that we will be able to raise funds for growth in an agile and stable manner from DigitalBridge. As a result, we will be able to respond flexibly to future additional funding needs and make up-front investments from a long-term perspective, thereby appropriately being able to seize growth opportunities in the infrastructure sharing market and further increase the speed of business growth."
Digital Bridge’s tender offer was submitted through DB Pyramid Holdings, and accepted by JTOWER in a board meeting held earlier today.
