VEON, the largest telecommunications tower operator in Pakistan, has conditionally agreed to sell its 10,500+ towers. The deal is sold to a consortium of TPL REIT Management Company (TPL RMC) Limited and UAE based TASC Towers Holding (TASC). The announcement was made to the Pakistan Stock Exchange (PSX) on Tuesday by TPL Properties (TPLP), the parent company of TPL REIT RMC. The notification to the PSX read:
“Further to our announcements dated September 20 and November 15, 2022, we are pleased to announce that the parent of one of the largest Telecom Tower operators in Pakistan, has conditionally accepted the offer, subject to signing of definitive agreements, all necessary corporate approvals and receipt of relevant regulatory approvals, made by our subsidiary TPL REIT Management Company Limited in partnership with TASC Towers (the “Consortium”) for acquisition of their subsidiary (Telecom Tower Infrastructure Company) which owns and manages more than 10,500 telecom towers in Pakistan.”
About the Investors
TASC, headquartered in the UAE, is a multinational global owner and operator of mobile telecom towers and has deployed and is managing over 14,000 towers in multiple geographies including Middle East, Asia and EU.
The Consortium is a synergistic partnership between TPL RMC and TASC with a vision to strengthen Pakistan’s digital infrastructure and support the rapidly growing digital economy. TPL RMC is the pioneer of, and operator of the largest mixed-use real estate asset class REIT in Pakistan and is a wholly owned subsidiary of TPL Properties. TPL Group (including PSX listed companies TPL Corp, TPL Insurance and TPL Properties), has been attracting institutional and strategic investors to Pakistan and this transaction will result in significant foreign direct investment. The proposed acquisition is being supported by one of the largest national financial institutions which is providing debt structuring advisory & arrangement services.
In September of this year, TPL RMC entered into a strategic partnership with TASC and
participated as a consortium in the auction process for the acquisition of Telecom Tower Infrastructure Company through. Later in November, the TPL RMC and TASC consortium submitted a bid for the acquisition of the said Telecom Tower Infrastructure Company.
Last week, Bloomberg broke the news that VEON is close to selling its tower infrastructure in Pakistan to TPL-TASC group in what could be the largest such deal in over a decade. The potential deal was valued at more than $600 million (PKR 135 billion).
Two weeks ago, on December 5, ENGRO announced that it was looking into a potential investment opportunity in the tower infrastructure of Pakistan. However, 10 days later ENGRO announced that it was planning to buy back 70 million of its shares. In light of the TPL-TASC deal nearing completion and ENGRO also announcing its buy-backs, it can be surmised that ENGRO has most probably not been able to win the bid for the tower infrastructure acquisition which is why it has decided to deploy its ample cash reserves elsewhere on the share buybacks.
According to information provided by KASB Ktrade Securities on its LinkedIn page, the tower portfolio is expected to benefit from significant synergies provided by the entire TPL group. The securities firm foresees considerable improvement in site efficiencies after the acquisition.
Other details as shared by Ktrade research are as follows:
- The transaction would require the establishment of a Digital Infrastructure REIT Fund by TPL RMC. The acquisition would be financed by a mix of equity (from the Fund) and debt. TASC Towers Holding would be a strategic investor of the Fund, and further provide technical services, with TPL Properties.
- TPL RMC would manage the fund and earn management fees and performance fees on the fund’s Net Asset Value (NAV) and its increase.
- The Fund is required to IPO as per SECP REIT regulations within three years. TPL RMC will benefit from carry-on investor exit and listing fees.
- The underlying Tower business has a tenancy ratio of 1.3x and over the coming years this is expected to grow. Higher tenancy will improve the tower portfolio’s IRR and, in turn, would likely increase the fund’s NAV.
- There are plans to improve the energy mix (reduced diesel, increase battery/solar/hybrid solutions) and overall operational efficiency of the tower portfolio. Some of these are likely to be through partnerships with TPL’s associated companies such as TPL Trakker (solutions such as Genset Fuel Monitoring & Maps).
- There are plans to add around 4000-5000 new tower sites over the next ten years.
- Post acquisition TPL would also be well placed to leverage its relationship with Jazz for synergies with its’ group companies.
The final deal is subject to approvals and consents from the regulatory authorities.
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