Asian telcos race to sell off towers, data centers

Suddenly, Asian operators are racing to sell off their infrastructure.

After a spate of asset sales since the middle of the year, the big Philippines operators, PLDT and Globe, and Indonesia's Ooredoo Indosat, are now reported to be joining the party.

PLDT believes its ten data centers could fetch $500 million and has hired JPMorgan to work on the transaction. Separately, it is also considering a sale and leaseback of its cell towers in a deal that could be worth as much as $1 billion.

Rival Globe Telecom, 47% owned by Singtel, is reported to be weighing the $200 million sale of its data centers, while in Indonesia Ooredoo Indosat has appointed financial advisers to help dispose of its data centers, said to be worth $150 million to $200 million, Bloomberg reported Wednesday.

Just last week, Indonesia's largest operator Telkomsel agreed to sell 4,000 telecommunication towers to affiliate Mitratel for 6.2 trillion rupiah (US$440 million). Mitratel is a subsidiary of PT Telkom, Telkomsel's controlling shareholder, with 24,000 towers already under management.

"The transaction will allow Telkomsel to optimise its capital structure as Telkomsel focuses on its core business of providing digital connectivity services to customers in Indonesia," Singtel said in a stock exchange announcement.

In July, PCCW announced the disposal of its data centers for $750 million, while Telstra agreed the sale of 49% of its tower business for $2.1 billion in June.

Telstra is reportedly prepping the sell-off of further parts of its infrastructure unit, recently valued by JPMorgan at A$30 billion ($22.2 billion). Competitors Optus and TPG Telecom are also looking to sell off their mobile towers.

Explaining the transaction, PCCW said the carrier neutral colocation service was "a distinct business" from its core telecom, media and solutions operations.

It said the data centers would require significant investment to support future growth. By realizing shareholder value through the disposal, the company would have the ability to allocate resources more efficiently to drive growth.

Matt Walker, CEO of MTN Consulting, agrees that "asset spinoffs are definitely picking up" in Asia but points out they are not completely new.

India and Indonesia both have thriving independent tower sectors, while the state-owned China Tower "is at least a semi-independent broker," he told Light Reading.

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He said multiple factors were behind the current push: 5G capex requirements, wider acceptance of independent towercos, continued flat mobile revenues and the need to better manage operational costs, and supply-side pull from private equity firms trying to assemble deals.

He said he expected a continued flow of deals "but most will be on the small side," with little likelihood of major transactions in the biggest markets India, China and Japan.

A recent MTN report forecast that the asset sales, initially in the US and now in Europe and Asia, would continue to grow under its own momentum.

"As the range of carrier-neutral asset companies continues to grow, this creates a sort of virtuous circle. The more truly carrier-neutral providers of towers, fiber, and data center facilities that exist in the market, the more willing telcos become to sell off their own assets," the report said.

It said the US is ahead of the rest of the world, with the big telcos turning asset-light years ago and now prioritizing software and service investments.

— Robert Clark, contributing editor, special to Light Reading