ISLAMABAD: The Competition Commission of Pakistan has given permission to Edotco, Asia’s largest tower infrastructure company based in Malaysia, to acquire Jazz’s tower business in return for $940 million.
The CCP gave the no-objection certificate last week for the acquisition of Deodar Private Limited, a subsidiary of Pakistan Mobile Communication Limited (Jazz), said Suresh Sidhu, Chief Executive Officer (CEO) of Edotco on Tuesday.
In August this year, Edotco Group in partnership with Dawood Hercules Corporation Ltd (DH Corp) had announced the acquisition of approximately 13,000 towers from Pakistan Mobile Communications Limited (Jazz). The CEO hoped that the Pakistan Telecommunication Authority (PTA) would soon give the permission to conclude the deal. Sidhu said usually, it takes three months to get regulatory approvals for such deals.
Edotco – through Tanzanite Tower Private Limited, a wholly owned subsidiary of Edotco Pakistan Private Limited – entered into an agreement with Pakistan Mobile Communication Limited to acquire its tower subsidiary, Deodar Private Limited, and its portfolio of over 13,000 tower assets. Sidhu said that Dawood Hercules has a 45% equity stake and the remaining rests with Edotco. The total transaction consideration for the proposed acquisition is $940 million, which will be funded through a combination of debt and equity.
The CEO of Edotco said that the debt-equity ratio will be 50:50. The debt will be raised from domestic markets and equity will be arranged from offshore, he added.
According to a handout of the company issued in August at the completion of the sale deal, Deodar will enter into a master services agreement (MSA) with Jazz, whereby it will continue to provide tower services to Jazz. The initial term of this MSA is 12 years and is renewable at Jazz’s discretion for three consecutive periods of five years each.
Edotco operates and manages a regional portfolio of over 26,000 towers across core markets of Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka and Pakistan. Edotco has planned investments in the region on infrastructure up-gradation, new infrastructure development, human resource development, and environmental rehabilitation. To become one of the biggest companies in tower infrastructure business, Edotco has to be the largest tower infrastructure company in Pakistan, said Arif Hussain, the CEO of Edotco-Pakistan. He said that there were huge business opportunities due to rapid broadband service growth and technology up-gradation in the country.
Edotco plans to become a top 5 tower companies in the world by 2020 through investment in industry best practices, provision of a broad portfolio of infrastructure solutions and value-added services to enhance efficiencies and connectivity for communities.
Hussain said that technology up-gradation from 3G to 4G and onwards would create the need for erecting more towers at the same sites. With a youth bulge and potential for exponential growth, Edotco has marked its operations in Pakistan as its crown jewel for years to come.
Sidhu said that there was also a huge opportunity for using existing infrastructure as the tower sharing in Pakistan was so far only 25% and that too, on a reciprocal basis. He said that the coverage gaps can be more efficiently and economically bridged after the availability of over 13,000 Jazz towers.
In his opinion, there was huge infrastructure requirement for fast growth of 4G technology. Sidhu said that it will take at least five more years before 5G is available for commercial purposes. He said due to high income levels, Malaysia has shifted to 4G technology.
Hussain was of the view that the existing mobile operators would first prefer to recoup the multibillion dollar investment made in acquiring 3G and 4G licences during the past two years.
Published in The Express Tribune, November 8th, 2017.