2022 has been a transformative year for APAC towers. In addition to 12 significant sale and leaseback transactions, towercos have consolidated portfolios and spread their wings into new markets and new digital infrastructure asset classes.
At a glance
The Australian market has continued to evolve at pace with Optus’s carve out making a series of acquisitions that included the former largest Independant towerco in the country, before rebranding to Indara.
OMERS acquired the final MNO held portfolio alongside independent towerco Stilmark to create yet another new towerco in the form of Waveconn. The towerco fever jumped the Tasman Sea to New Zealand last year with Spark and Vodafone both carving out and monetising towers. One of these carve outs has since gone on to acquire towers from third MNO 2degrees.
Fresh opportunities emerged throughout the year for investors to enter positions or acquire full portfolios in numerous markets, from Bangladesh and India to the Philippines, Vietnan, Malaysia and Indonesia.
The Philippines saw six sale and leaseback transactions with EDOTCO, EdgePoint and Unity buying towers from PLDT while Globe sold half its portfolio to MIDC, Frontier and Philtower. Japan announced its first transaction of note early in the year, but momentum is still building.
2022 has also been the year where towercos started planning for the next generation of mobile networks with their MNO partners, whether that be 5G in India, In Building Solutions in Malaysia or metaverse applications in Singapore.
Sustainability has moved up the agenda and there are nascent signs that towercos will soon be managing power in more markets across the region. This is leading to refreshed investment in equipment such as rectifiers, battery, gensets and solar solutions, with an emphasis on keeping both costs and emissions low. While this has been the case for some time, 2022 seems to be the year that these two metrics were considered with far more priority, although cost still dominates decision making.
2022 has also been a year that towercos have invested time and resources in digitising their assets and operating platforms. Emerging from the pandemic where certain process innovation was necessary to keep sites live and the core business running, providers of digital twins and asset management systems have been continuing to innovate.
As a result, both the supply and demand for the use cases towercos were outlining in 2019 are far closer to being realised, driving huge investment in the space.
So, with all of this in mind, what happened this year in APAC towers?
January: 2022 didn’t start off as strongly as it ended. The main headlines from the first month of the year featured Summit Towers signing an agreement with Banglalink in Bangladesh, Indara building out its management team in Australia and MNO turmoil/consolidation changing the dynamics of a few markets.
In Indonesia for example, the completion of the Indosat Ooredoo/CK Hutchinson merger created a BTS opportunity as the new operator committed to coverage requirements as part of the approval process. Nepal lost an operator as Nepal Telecoms licence was revoked and M1 Group found a local partner to complete its take-over of Telenor’s Myanmar Opco.
February: On your marks. Get set... The biggest news this month came out of Australia and New Zealand, with both incumbent Kiwi MNOs announcing intentions to carve out their tower assets in separate announcements. Spark and Vodafone New Zealand would go on to mirror each other in this area for the rest of the year.
Across the Tasman Sea, Telstra and TPG Telecom agreed a ground-breaking sharing deal for rural sites that would go on to cause both controversy and optimism regarding active sharing opportunities in Australia.
February was also the month that cash-strapped Indian operator Vodafone Idea (Vi) exited its position in Indus Towers to raise funds to pay unpaid dues to both the towerco and the government.
March: And they’re off! March saw very exciting news come out of Japan as JTower and NTT followed up on their 71 tower SLB announcement in 2021 with a mammoth 6,000 (and 2) tower transaction. However, none of these towers are yet to change hands as JTower is still securing financing for the portfolio. Another significant tower sale came in the form of EDOTCO acquiring 1,021 towers from its parent company for a total of US$52.2mn.
Elsewhere in Indonesia, Centratama becomes EdgePoint’s primary vehicle for tower operations in the country, as the DigitalBridge and ADIA backed towerco consolidated its two portfolios under the Centratama banner. EdgePoint Infrastructure entered the Indonesian market in 2021 with several equity deals that saw them acquire the vast majority of shares in local towerco Centratama, and also purchase around 4,200 towers from Indosat Ooredoo. The two tower portfolios had been sitting on two different balance sheets until this month.
April: Time to pick up the pace. April saw the first Sale and Leaseback in the Philippines and a landmark transaction in Australia. In just these two deals, almost US$5bn changed hands, as Indara (then known as ATN), EdgePoint and EDOTCO all bought new sites.
In Australia, Indara’s acquisition of Axicom was for 100% of the company and was worth an estimated US$3.5bn. The deal made a lot of sense for market observers – Axicom were touted to be favourites to acquire the Optus portfolio that formed Indara in the first place given the complimentary nature of the two sets of towers.
Axicom began its life as Crown Castle Australia in 2000, and acquired the majority of its 2,000 towers from Optus and Vodafone before rebranding to Axicom in 2015 when Macquarie got involved. Those 2,000 towers were mainly metro sites, with very few rooftops, whereas the 2,300 sites Indara bought from Optus were metro rooftop and more rural sites. The deal temporarily created a two horse race in Australian towers, with Indara and Amplitel controlling 75% of the market.
Over in the Philippines, the wait for the first sale and leaseback ended. EdgePoint Infrastructure expanded its footprint into the Philippines this month, with an acquisition of 2,934 towers across the Luzon Island group. EDOTCO strengthened its position as the leading pan-asian towerco with its own acquisition of 2,973 towers primarily located in Luzon, Visayas and Mindanao. PLDT signed a ten-year deal and the two towercos assumed responsibility for power services and maintenance once the deals close.
Outside of the M&A news, towercos in India received positive signals from state backed operator BSNL as it plotted a huge BTS order. In an attempt to increase its 4G coverage, India’s state-owned operator announced it plans to order three waves of towers. Addressing the Indian parliament, Telecom Minister Ashwini Vaishnaw explained that BSNL was in the process of ordering 6,000 towers and would shortly follow up with two additional orders; one for a further 6,000 and one for 100,000.
May: We continued to shift through the gears in May as another transaction was announced in Australia, Tower Bersama received fresh investment from Macquaire and PSP Investments and India started to prepare for an imminent 5G launch.
Following in the footsteps of Telstra and Optus, Australia’s third MNO, TPG Telecom, monetised the remainder of its towers by selling 428 towers and 809 rooftop sites for US$674mn to Canadian pension fund OMERS. TPG signed a 20-year MSA contract as anchor tenants at the sites. In line with the Telstra and Optus sales, the towers were valued at a significantly high EBITDA of 32.1x.
Over in India, 5G spectrum auction and rollouts were announced. Ashwini Vaishnaw, the telecoms minister for India, announced that spectrum auctions would be held in June, and rollouts would begin in August. Let’s see if those targets were met later on! Despite being the second largest country in the world by population and towers, mobile infrastructure in India is underserved, while instability and financial woes on the operator side has led to a challenging few years for the country’s towercos. Nearly 500,000 new sites will be required for the country’s next generation of mobile networks.
Elsewhere, Indonesian towerco Tower Bersama received fresh investment from Australian asset manager, Macquarie, and Canadian pension fund, PSP Investments. Between them the two funds spent a combined US$610mn to acquire a minority stake in Bersama Digital Infrastructure, who in turn own a 64.5% stake of Tower Bersama. Tower Bersama are Indonesia’s third largest towerco and have 20,466 towers in the country, as well as impressive tenancy ratio of 1.9x (the highest in the country). The transaction implied and enterprise value for the towerco of over US$6.5bn. It wouldn’t be long before the new investors made a statement of intent for Tower Bersama’s future.
June: In a small stumble, the June target for India’s 5G spectrum rollout was missed as operators sought clarification on the government's decision to allow enterprises to acquire spectrum and establish captive non-public networks. The MNOs oppose the allocation of spectrum to private networks, whereas providers of the services such as TATA Communications argued that there would be no business case for the rollout if captive networks were not permitted.
Summit Towers hit a landmark 1,000th tower built in the promising market of Bangladesh in June 2022 while Protelindo considered a 20% equity sale to raise US$1bn.
OMERS announced its second deal in as many months, acquiring the nimble and highly touted Stilmark towerco to manage its TPG sites and challenge Indara and Amplitel in the Australian tower scene. The two companies had been working together since the early days of the Optus sale as part of the Symphony Consortium but OMERs and TPG had operated bi-laterally on the TPG Sale.
July: Back on track! July saw both New Zealand deals announced with Spark selling a controlling 70% interest in the business to OTPP, while Vodafone sold its towers to global asset management firms InfraRed Capital Partners and Northleaf Capital Partners with each acquiring 40% of the 1,484 sites.
Tower Bersama put its PSP and Macquarie capital to use, partnering with local investment firm Opti-Teknology to acquire a majority stake in Alliance Tower Corporation with plans to roll out 500 sites by the end of the year.
Japanese MNO Rakuten continued its trend of innovative network rollout by partnering with Tokyo Electric Power Company (TEPCO) to deploy base stations at its power grid sites. The two companies have formed a Joint Venture - Rakuten Mobile Infra Solution, which immediately began operations.
July also saw the completion of the Indian spectrum auction, with Jio and Bharti spending big to secure the ability to provide nationwide coverage. Vodafone Idea were more strategic in its bids, while Adani Data Networks were the sole provider that looked to acquire spectrum for captive private network purposes.
August: We’re over halfway through the year with no sign of slowing down. OMERS made the headlines again in August closing both its Stilmark and TPG transactions and rebranding its new towerco to Waveconn. In Bangladesh, VEON signed a tower sharing agreement with government run BTCL to expand both operators network coverage and the Cambodian government announced plans to fund 100 new sites at key tourist locations.
India had a very busy month, as Indus Towers CEO Bimal Dayal stepped down after a twelve-year stint that started in 2010 when he was appointed COO. In an unrelated development Vodafone Idea started to enter talks to sell its remaining 21% share in Indus to Canadian pension fund Caisse de Depot et Placement du Quebec (CDPQ) Vodafone formerly owned 28.1% of India’s largest towerco (and the third largest globally) but sold a smaller stake to Bharti Airtel earlier in the year to raise funds to ease its burdensome debt.
There was another wave of sale and leaseback transactions in the Philippines, with PLDT competitor Globe choosing to follow suit and sell to two separate towercos. Globe agreed to sell 3,539 towers for US$810mn to Frontier Tower Associates, the KKR backed subsidiary of Pinnacle Towers, and 2,180 towers for US$468mn to MIESCOR Infrastructure Development Corporation (MIDC), a subsidiary of Meralco (a local electric power distribution company).
Globe also provided a firm commitment to MIDC to build an additional 750 towers over a period of four years and also announced they were in advance talks with a third party for the further sale of 1,350 towers that were eventually sold in September.
Another sale and leaseback deal broke in Indonesia, with Indonesia's largest MNO, Telkomsel, announcing a third tower sale in as many years with sister company Mitratel. A 2020 deal for 6,050 towers at US$700mn and a 2021 deal for 4,000 towers at US$436mn was followed in August by a sale of 6,000 towers for an undisclosed price.
As part of the agreement, Mitratel were deemed responsible for implementing proactive power consumption optimisation, significant because towercos in Indonesia rarely assume responsibility for power and merely provide it as a passthrough. Only 5% off Mitratel’s sites are in off-grid locations.
September: Keeping up August’s momentum in the Philippines, Globe finalised its next sale and leaseback with Macquarie backed Philtower. Philtower paid US$338mn for the 1,350 sites which boosted the towercos Manila focused BTS portfolio to provide a nationwide offering.
Indonesia maintained its pace as well with Indosat Ooredoo Hutchinson plotting a 1,850 tower sale that they expect to raise $US250m and in Malaysia it was reported that EDOTCO were looking at a US$600mn stake sale.
Of course, no month would be complete without an acquisition in Australia, so Indara stepped up to the plate with an acquisition of street furniture manufacturers, distributers, and managers HUB and ENE.HUB. The deal is the first in what is touted to be a series of acquisitions from Indara that would see the towerco transform into a more holistic digital infrastructure provider.
India and Malaysia both received good news in terms of their 5G rollouts. Reliance Jio outlined plans to spend US$25bn on 5G rollout in India and planned to launch services in major metro locations by the end of October. The major festival of Diwali (24th October) was also seen as a deadline for the first 5G offerings by Airtel, who planned to cover numerous cities across India by the end of that month. Both operators, outlined plans to provide nationwide coverage by December 2023.
In Malaysia MNOs agreed access agreement terms with the countries wholesale 5G provider DNB (Digital Nasional Berhad) and stake sales in the network builder were revealed.
It was previously expected the 6 MNOs would share a 70% stake in DNB between them, but Maxis and U Mobile opted to not take a stake. Soon to merge Celcom and Digi will take up a 12.5% stake each while YTL and Telekom will own 20% each, to total a 65% stake sale and with access agreements approved Malaysia was finally able to begin its 5G launch.
October: Rounding the final corner into Q4 of 2022 and the tower landscape got a shake-up in Bangladesh. AB Hightech – one of the three new licence holders, were acquired by Pinnacle Towers, the team who launched Frontier Tower Associates Philippines and established it as the leading towerco in the market. ABHT is to be rebranded as Frontier Tower Associates Bangladesh.
In another rebranding exercise, the finalisation of the ATN/Axicom integration and the foray into street furniture the previous month meant Indara was born from the two towercos in Australia.
India’s 5G launch deadlines were hit, but while Jio and Airtel were celebrating, Vi were re-negotiating payment terms with Indus Towers amid threats that they might lose access to the towers if dues remained unpaid. American Tower are also chasing rent and October marked the first discussions of the world’s largest independent towerco taking an equity stake in Vi to repay dues in what would be an unwelcome settlement.
Malaysian tower builder OCK Group signed a shareholder agreement with Laos’ Ministry of Finance to expand its presence in the country and form a new towerco. OCK Laos TowerCo will be a joint venture between the two parties, with OCK owning a controlling 70% stake with applications for an official tower licence ongoing.
Indonesia’s largest towercos both made headlines as Protelindo closed a deal for 10,750km of fibre assets. Protelindo bought the fibre from PT Alita Praya Mitra, whose assets predominantly served the towers of XL and IOH located in a number of key areas including Surabaya, Solo, Malang and Bali.
Mitratel also unveiled a new strategy to look closer at digital infrastructure beyond its current tower business with an immediate focus on offering fiber optic, edge computing, and power to tower services. Organic growth targets see the towerco plotting to add 1,000 more towers, 2,500 collocations, and 9,000 km of fibre in 2023. Mitratel will also collaborate with Telkomsat to provide connectivity solutions using satellite services.
November: Coming down the home straight November marked two more rebrands from APAC towercos. EDOTCO marked the move into its new office complex in KL with a new identity to reflect the next 10 years of the company’s mission to enable digital connectivity, while the Spark/OTTP towerco in New Zealand unveiled its new name, Connexea.
We learnt of a new towerco coming to Cambodia as CellCard created a new business unit in the form of Telemobile, that will build and manage tower and power infrastructure for the MNO. The portfolio is a combination of rooftop and macro sites and will mark the first time that a towerco has taken responsibility for power in the country.
CellCard are yet to disclose any plans to seek external capital, but given the high valuations APAC towers have been receiving the past two years, this seems likely in the months to come.
December: Crossing the finish line of 2022, there was a burst of tower news in December. Connexea completed the set of New Zealand’s tower portfolio sales by buying just over 1,000 sites from the third MNO in the country- 2Degress. TowerXchange believes the deal is the most expensive sale and leaseback ever (potentially excluding the US as our data doesn’t reflect the transactions that happen there).
1,124 mobile towers were sold by 2Degrees for US$1.08 bn which equates to US$960,854 per tower.
Within 24 hours of the Connexea/2Degree’s sale being announced, Smart announced that it was selling yet more towers. In October it was rumoured that PLDT were planning to sell 2,000 more towers, and these reports were confirmed by the operator in November.
The first 650 of this 2000 are set to be inherited by Unity Digital Infrastructure, for a sum of PHP 9.2 billion (US$166m). Unity Digital Infrastructure has been building towers in the Philippines since the end of 2020, and is owned by local investment firm Aboitiz Infra Capital, as well as international Private Equity house Partners Group.
The towers that will be purchased are situated in the Visayas and Mindanao areas, which provides Unity a high-quality portfolio of strategic locations across the country.
2022 was a transformational year in APAC Towers and it leaves us with the question of what does 2023 have in store? What will be the hottest markets from an M&A perspective? Where will towerco budgets be allocated and what new tech will continue to innovate the industry? Check out our Meetup Asia 2022 top 10 takeaways (coming soon) to learn about all of our predictions for the year ahead!
