Malaysian telecom giant Axiata will add 13,000 telecoms towers to its portfolio after agreeing to pay PRs 98.7 billion ($940 million) for the tower business of Pakistan’s largest telecommunications services provider Jazz, extending its reach to the rapidly-growing South Asian nation.
The transaction, expected to close by the end of this calendar year, will nearly double Axiata’s portfolio of about 16,000 towers operating under its infrastructure arm edotco Group.
The deal underscores Axiata’s strategy of growing its tower business in emerging markets while cutting its exposure in more mature markets. Pakistan is the latest destination for Axiata’s tower business, which already covers Sri Lanka, Bangladesh, Cambodia, Myanmar and its home country of Malaysia.
Last year, Axiata sold its tower business in Indonesia for $267 million, making a major step to reduce exposure in more crowded markets. Indonesia has over 75,000 telecommunications towers but most of them are operated under the big three tower companies, namely Profesional Telekomunikasi, Solusi Tunas Pratama and Tower Bersama Infrastructure.
In the latest transaction, Axiata is buying a 55% stake in Jazz’s tower business through edotco, while the remainder will be taken up by local conglomerate Dawood Hercules, according to the company’s announcement. Jazz is 85% owned by Dutch integrated telecommunications services operator VEON.
At completion of the sale, Jazz will enter into an agreement with the new owner to lease back the towers for an initial term of twelve years, with an option to extend the agreement by a total of 15 years.
"edotco is delighted to expand its business in Pakistan by catering to the network requirements of Jazz, the country's number one digital communications company,” said edocto chief executive officer Suresh Sidhu. “The transaction also shows our commitment to Pakistan and the tremendous investment opportunities it offers."
The transaction also marks an important step for Amsterdam-listed VEON to build an asset-light strategy and better utilize its resources.
“This transaction is highly value accretive for VEON and a further execution of VEON’s asset light strategy. It also reflects the start of a long-term partnership with a strong counterparty with significant experience in tower management,” said VEON chief executive officer Jean-Yves Charlier.
Proceeds from the transaction will be used for Jazz’s general corporate purposes, debt repayment and for funding its recently awarded spectrum.