Edotco Malaysian towers share sale could raise US$1 billion

Edotco Group is reportedly working on a deal that could bring in as much as US$1 billion from the sale of shares, more than half of which would help to fund its own growth ambitions.

The Malaysia-based towers specialist, which is majority-owned by telecoms group Axiata, is mulling a share sale that could raise $600 million, Bloomberg reported, citing the usual unnamed people familiar with the matter. In addition, its existing shareholders, including Axiata, could get in on the act and sell down their stakes, boosting the value of the overall sale to $1 billion.

The newswire’s sources said Edotco is working with an advisor on the matter, but cautioned that deliberations are at an early stage and no decisions have yet been made.

The deal, should it come to fruition, represents yet another way for telecoms infrastructure players to raise money on the back of their valuable towers assets. While most major global towers deals have been just that – the sale of towers, that is – Edotco is flogging off shares in itself, but the end result is the same; the firm gets to cash in on investor appetite for passive infrastructure.

Indeed, the report notes that both other industry players and investment firms would likely look at any Edotco share sale, pointing out that the appetite for digital infrastructure assets in Asia is still on the up.

In Bloomberg’s words, the drive to raise cash at this point in time forms part of Edotco’s efforts to “turbocharge its growth.” That could mean any number of things, but the most likely is probably investment in increasing its footprint, one way or another.

Edotco boasts a portfolio of 50,000 towers across various Asian markets, specifically Malaysia, Indonesia, Bangladesh, Cambodia, Sri Lanka, Pakistan, Philippines, Myanmar, and Laos. It has built up that footprint through a combination of organic growth and M&A.

Its latest acquisition saw it agree a 42 billion Philippine pesos (US$740 million) deal for a package of  2,973 towers from PLDT in April, alongside a commitment to build a 750 sites in the market under a build-to-suit programme. That deal has yet to close, but the firms expect it to be finalised before the end of the year, raising Edotco’s total number of sites to around 54,000.

Three months ago the company announced an acceleration of its expansion plans, launching new tools to hep operators in its region to roll out 5G networks. Edotco said it was driven by a desire to create equitable connectivity in Asia, but it was clear that its own growth ambitions played a big part too.

“The company also reaffirmed its ambition to become one of the world’s top five tower companies,” it said, at the time.

That’s a goal Edotco has been working towards for some time; once upon a time it was confident of getting there by 2020, but now it has attached no timeframe to its endeavours.

It’s probably worth noting that a number of the world’s biggest towers companies have buled up significantly in recent years, so Edotco could well face more of an uphill battle than it first envisaged, presuming being among the top five is predicated on the number of towers it owns.

If it is to get there it will need to buy as well as to build.

“We…intend to expand into several new markets in Southeast Asia and South Asia, completing our presence in the region over the next few years,” Edotco’s group CEO Mohamed Adlan Ahmad Tajudin said in a canned statement earlier this year. “This expansion is required to ensure that the company continues to deliver scale while solidifying our foothold in the region and solidifying our position as the leading pan-Asian next-generation TowerCo.”

That’s a pretty clear statement of intent. And assuming Bloomberg’s sources are correct, the company is now looking at ways to build a war chest to help it grow.

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