The Philippine tower market has undergone a significant transformation in the past four years, most recently with the formation of a brand-new joint venture that intends to transform the 4G and 5G mobile and digital infrastructure in the market.
In February 2024, independent towercos PhilTower and MIDC announced a brand-new JVco that will combine and consolidate its presence in key Filipino markets in Luxon, Visayas and Mindanao, whilst bringing improved coverage for MNOs and supporting the country’s connectivity needs.
Macquarie Capital is now exploding a sale in the joint venture which may value the new company at US$700mn to US$800mn. Prior to the merger MIDC was busy on the transaction front, most recently completing the purchase of 154 additional towers from Globe in March 2024, with 62% of Globe’s 2,180 towers in a deal worth US$468mn now in the hands of MIDC.
Tasked with increasing coverage across the challenging Filipino landscape that includes over 9,000 islands and 100 million people, Dito has got off to a flying start, exceeding targets by amassing 12mn subscribers and over 7,500 towers by the start of 2023.
In addition to the establishment of a third operator, a common tower policy was established that supported objectives to significantly increase coverage and capacity. Industry experts estimate that the Philippines requires 70,000 sites to hit its coverage goals.
Philippines telecom market statistics Q4 2024
A new favourable regulatory framework, immense build to suit opportunities and the prospect of significant SLB deals with Smart and Globe has spurred huge interest in the country.
However, independent tower companies (or common tower companies as they are known locally) in the Philippines must be at least 20% owned, or in a consortium with, companies with at least five years of experience constructing, owning, operating and/or maintaining towers in the country.
The first of these deals was announced in April 2022 with Malaysian-based towercos EDOTCO and EdgePoint each acquiring 5,907 towers between them for just under US$1.5bn. Globe’s first transactions were announced in August 2022 with KKR backed Frontier Tower Associates, and MIDC, a telecom tower infrastructure subsidiary of Meralco.
Frontier Tower successfully acquired 3,539 towers for US$810mn and signed an agreement to secure Globe access to the towers for an initial period of fifteen years.
Smart announced two more transactions in December 2022 and March 2023 with Unity and Frontier respectively. Unity secured their second sale and leaseback, this time with Globe, in May 2023.
Local conglomerate Aboitz Infrastructure created Unity in partnership with international private equity player Partners Group.
In June 2022, ISON Tower secured funding from Peppertree Capital, who have also invested in Australia and US towers recently.
I-eng’s investment arm, CREI, have also launched a towerco in the Philippines, building 250 sites and securing investment from the IFC. Bersama Digital have also made their first move outside of Indonesia by investing in Alliance Towers Corporation and Singapore headquartered Tiger Towers have also built around 100 sites.
Philippines estimated tower ownership – Q4 2024
Despite a boom period brought around by the initial licencing of new towercos and the first sale and leasebacks, financial irregularities have curtailed digital infrastructure development in the Philippines. Firstly, DITO are experiencing financing issues.
DITO were 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. DITO has agreed a handful of co-locations and a small number of BTS sites with towercos, but is responsible for just a small fraction of towerco deployments.
Secondly, Smart’s parent company PLDT has been 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.
To round things off, Globe made the decision to focus more on co-locations than new sites in 2023. Globe built around 2,000 towers a year between 2020 and 2022 with towerco partners, but have reduced this to just 500 in 2023.
Key challenges the Philippines faces are around permitting and securing grid connections to power sites. Permitting laws in the Philippines are incredibly outdated, and face numerous local nuances.
From an energy standpoint, The Philippines grid is managed by several local power co-operatives, who are responsible for generating and supplying electricity in their dedicated region. Some of these co-operatives are small organisations that have manual workflows and severe red tape that is making electrification of tower sites challenging for towercos. This is especially the case for international players who are new to the country’s local customs.
