edotco’s acquisition spree continues
edotco’s third tower acquisition in the past 6 months is its most significant
and potentially also the most exciting. edotco becomes among the pioneer
independent towercos in Philippines, with the third mobile operator still
expanding in coverage. Reiterate BUY on Axiata with an unchanged
MYR4.70 SOP-TP. Axiata remains on track for a multi-year earnings
recovery as management strives to deliver a 20sen DPS in 2024.
Among the successful bidders for PLDT’s towers
PLDT (TEL PM, BUY, CP: PHP1,899, TP: PHP2,105) has announced the sale
and leaseback of 2,973 towers to edotco (Axiata’s 63%-owned tower-co
subsidiary) for PHP42b (c.MYR3.4b). This represents 1 of 2 portfolios of
towers which PLDT sold, with the transaction multiple for both being
quoted at 20x EV/EBITDA. A 10-year leaseback has been agreed, with rates
set at PHP100k/tower/month with collocation discount.
First mover advantage
Axiata and edotco have yet to make a public release, thus funding details
by edtoco remain unknown at the time of writing. The transaction multiple
appears steep, in our view, but can be partly justified by the strategic
benefit of being among the pioneer independent towercos operating in the
Philippines. edotco’s tower portfolio is evenly distributed across Luzon,
the Visayas, and Mindanao. With Philippines third mobile operator still
expanding in coverage, there is ample potential for collocation.
Organic growth next
The acquisition brings edotco’s total sites to c.49k, another step closer to
its >70k aspiration. We estimate edotco’s net debt-to-EBITDA at c.4.0x
post transaction, thus further acquisitions are unlikely without equityraising. Axiata will host a briefing this morning. Our earnings forecasts and
MYR4.70 TP (derived from a sum-of-parts with each op-co valued on DCF)
are unchanged pending deal completion.