Japan-based NTT Docomo has agreed to sell 1,552 towers to JTower for JPY17 billion (US$114 million), which the operator will then lease back, as the two companies accelerate their network sharing efforts.
The two companies struck a similar deal in March 2022 involving the transfer of 6,002 Docomo towers to the infrastructure-sharing company for JPY106.2 billion ($870 million). As of the end of June 2023, approximately 2,400 towers have been turned over to JTower.
A stipulation in both agreements outlining the towers sale required JTower to lease out the infrastructure to Japan's other mobile network operators (MNOs), namely KDDI, Rakuten and SoftBank.
In a statement, Docomo said the transaction brings down the capital investment and operating expenses for tenants to speed up the rollout of 5G networks in Japan. The subsequent network sharing framework also reduces the environmental impact through the more effective use of existing infrastructure, it argued.
The operator also said it is working to build a viable 5G network by promoting infrastructure sharing and that tower sales will further streamline its network operations.
JTower said the purchase of telecommunications towers will greatly strengthen its business foundation as a tower sharing operator. The company is also looking at buying towers from other Japanese MNOs.
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"We are in conversations with all the MNOs in Japan about further sale and leasebacks, and we are in a good position to buy the towers from them if the economics make sense for both sides," Atsushi Tanaka, CEO of JTower, told Tower Xchange earlier this year.
The tide has turned
When JTower started in 2012 as the first infrastructure sharing company in Japan, it had little leverage with the domestic MNOs, which owned most towers and were not interested in selling and leasing them back. Nor were the operators interested in letting JTower build towers for them.
All that changed four years ago when the government allocated 5G spectrum to four operators – with the provision that they cover parts of the country where they do not have a 4G footprint. The new coverage requirements and the move to 5G standalone networks are driving operators to change their approach towards infrastructure sharing.
Reports said that JTower will build 150 towers in rural locations by March 2024.
"There's a reason operators were not there themselves, they were low traffic sites that did not justify the capex investment. So, at that time we went back to them and offered to build the sites and they were far more receptive," Tanaka said.
"One of our criteria for building a tower is that we need to make sure that there is a co-location with a second operator. As a result, all 150 of these towers will have a minimum of 2x tenancy ratio," he added.