DigitalBridge offers US$629 million for J Tower

And that's good news for J Tower, which insists it need a flexible funding partner to help it through the 6G and space-based communications era.

The infrastructure investor has tabled a 3,600 yen-per-share offer for J Tower, which represents a hefty premium on its recent stock price; J Tower has been trading at around the JPY1,500 mark for the past few months, although this time last year it was sitting at above JPY6,000.

J Tower shared the terms of the offer in a lengthy Japanese language document, A bit of maths shows that if all shares are tendered, DigitalBridge is on the hook for a bill of around JPY92.6 billion (US$629 million).

That high-end offer serves as a real statement of intent, and is likely to land well with investors. Indeed, in that same document J Tower noted that certain major shareholders, including NTT – its second-largest investor with a 16.35% stake – have already agreed to the offer. Mobile operator NTT DoCoMo and J Tower chief executive Atsushi Tanaka – who will continue to lead the company should the takeover prove successful – will also tender their shares. All together the three claim more than 25.5% of J Tower.

And, in a separate English statement, J Tower noted that its board recommends that other shareholders accept the offer. The offer period will run from Thursday until 10 October.

The rationale for the deal as far as both parties are concerned is not wildly different from other towers investments we have seen in this industry in recent years: DigitalBridge is willing to plough in cash to fund ongoing business development, knowing that returns will not happen in the short term. J Tower needs the money and infrastructure investors with that type of long-term outlook are its best option.

J Tower, and its telecoms operator customers, have the same needs as similar companies elsewhere in the world when it comes to towers and mobile network expansion. But the characteristics of the Japanese market add an extra dimension.

"In the Japanese telecommunications industry, in addition to the deployment of new communication technologies for Beyond 5G and 6G, the burden on telecommunications carriers is expected to continue to increase due to the expansion of the coverage area required not only for disaster response and rural areas on land, but also for the sky, sea, and outer space," J Tower explained. "In addition, as the population continues to decline, a major issue is how to maintain and operate communication infrastructure in a stable manner with limited human resources."

As such, it highlights a growing need to improve the efficiency of indoor and outdoor network development, as well as maintenance and operations, through infrastructure sharing. And it needs a funding partner to help it meet those needs. Hence the DigitalBridge partnership.

"As a result, we will be able to respond flexibly to future additional funding needs and make up-front investments from a long-term perspective, thereby appropriately being able to seize growth opportunities in the infrastructure sharing market and further increase the speed of business growth," J Tower said.

It makes a persuasive case for the DigitalBridge deal. It seems likely that shareholders will agree, but it could be a couple of months before we know for sure.