The first public consolidation in the country will see over 3,300 towers combined under the newly integrated organisation, serving improved coverage for its mobile network operator (MNO) clients including Globe Telecom, Smart Communications, and DITO. There is also a pipeline of a further 2,100 committed orders to MNOs.
The combined company (JVCo) will continue to be backed by a consortium of MIDC and PhilTower’s existing investors including Stonepeak, MIDC’s parent company MIESCOR, Macquarie Capital, and pan-Asian digital shared infrastructure provider Global Network Inc.
Both towercos have heavily transacted with Globe. MIDC purchased 2,180 towers from Globe in August 2022, with 1,348 of those currently in its hands. This consists of 72% ground-based towers and 28% rooftops. TowerXchange believes MIDC’s overall site count to be 2,638.
Macquarie Capital has been a shareholder in PhilTower since 2021 and committed 100 % of the equity to support PhilTower’s acquisition of up to 1,350 towers from Globe Telecom Inc.
PhilTower operates close to 1,500 towers – 990 of which are sites which come from acquiring Globe assets in the southern part of the country, with another 450 towers built by PhilTower themselves. At present, a third of total sites are in the Luzon region in the north and the two thirds are situated in the south.
Philippines’ first public consolidation
Devid Gubiani, President and CEO, PhilTower will front the new organisation as Group CEO, flanked by a senior leadership team that will include a CFO and CCO being appointed by the shareholders, the largest of those being investors Macquarie and Stonepeak, and Meralco (who own MIDC and is the largest power co-operation in the country, managing grid connections across much of Metro-Manila).
Gubiani, Chief Executive Officer of the JVCo, said, “I am confident that the combination of MIDC and PhilTower’s unique strengths and competencies will further digitisation objectives in the Philippines as the country’s younger generation continues to drive exponential data consumption. The MIDC team’s expertise and portfolio are highly complementary to PhilTower’s, and together with our partners we will have the ability to make a real difference through the delivery of world-class telecoms infrastructure and services to our customers.”
The expansion of towercos’ businesses hasn’t been seamless, with financial irregularities curtailing digital infrastructure development in the Philippines. DITO has experienced financing issues. DITO was required to cover 70% of the Philippines by July 2022, a target which they hit, but preferred to keep their tower deployment in-house to reduce the risk of their licence being revoked if the new towercos were not up to the task.
Secondly, Smart’s parent company PLDT was rocked by a probe into a US$886mn budget overrun. The operator could not account for 12.7% of its capex investment in the past four years, which resulted in the senior leadership team being suspended or leaving the company.
Philippines’ MNO environment
PhilTower’s Gubiani said in an interview with TowerXchange back in April 2024 that the lack of growth in the MNO space has had a destabilising effect on the tower market in the Philippines. “The hard reality was nobody within the industry was happy with that situation.
“The DITO business model is different than any typical MNO in which they build their own sites and went on their own build approach rather than heavily relying on towercos. We had a second largest co-location order from DITO on our build-to-suit (BTS) portfolio, but very marginal on the SLB that we had acquired. So, DITO wasn't really going to save the day,” he added. “And Smart was missing in action through the whole of 2023 and a very good part of 2022 because of internal governance issues. And so there was very little BTS to work on because Globe was the only one active.”
The towerco market is saturated with some 21 independent tower companies (or common tower companies as they are known locally), consisting of KKR-owned Pinnacle Towers – the country’s largest towerco, pan-Asian heavyweights EdgePoint Infrastructure and EDOTCO, followed by PhilTower, MIESCOR Infrastructure Development Corporation (MIDC), Unity, CREI Management Services, and a long tail of middle market towercos.
Ricky Steyn, Deputy Chief Executive Officer of JVCo, said, “This combination unites two successful telecoms companies in a transaction that will bring both enhanced, quality digital infrastructure to Filipino consumers and meaningful value to MIDC and PhilTower’s partners. I look forward to working closely with Devid and the rest of the JVCo management team as we work to successfully integrate MIDC and PhilTower and deliver on the potential of the combined company.”
Darren Keogh, Senior Managing Director at Stonepeak, said, “The joining of MIDC and PhilTower will allow for the more effective delivery of critical digital infrastructure through its combined footprint, helping to bridge the digital divide in the Philippines. This is an exciting milestone for both MIDC and PhilTower, especially given the support and demand the Philippines mobile tower industry is realizing. We look forward to working with our partners in the combined entity as it seeks to become a market leader in digital infrastructure.”
Ivan Varughese, Head of Infrastructure and Energy Capital, Asia, Macquarie Capital concluded: “Since 2021, Macquarie Capital has invested and played an important role in supporting PhilTower’s growth, using our development expertise in both infrastructure and telecommunications and flexible capital to help the company scale to the point that it is now a widely recognised industry leader. As the Philippines Government focuses on building up its digital infrastructure and empowering its people digitally, we are proud to be bridging the digital infrastructure gap for local communities across the country.”
