edotco partners Dawood Hercules to acquire 13,000 towers in Pakistan

By Digital News Asia September 4, 2017

The total transaction consideration for the proposed acquisition is US$940 million
Company will become the 8th largest independent tower company globally after acquisition

edotco partners Dawood Hercules to acquire 13,000 towers in Pakistan

EDOTCO Group Sdn Bhd, a subsidiary of Axiata Group Bhd, announced on Aug 30th, its biggest expansion plan to date with the proposed acquisition of approximately 13,000 towers in Pakistan to solidify its position as one of the largest independent tower companies in the world.

edotco is acquiring the towers from Pakistan Mobile Communications Limited (PMCL) together with Dawood Hercules Corporation Limited (DH Corp), a leading listed investment conglomerate in Pakistan.

With its existing portfolio of over 26,000 towers owned and operated across six countries, the move will effectively place edotco as the eighth largest independent tower company and second largest multi-country tower operator globally.

Edotco chairman Azzat Kamaludin said: “With its strong business fundamentals and long-term potential, this acquisition marks a very significant expansion to edotco’s regional footprint and puts edotco firmly within the top 10 tower companies globally.”

The proposed deal follows edotco’s recent successful acquisition of Tanzanite Tower Private Limited (TTPL) and its 700 towers.

This reflects edotco’s continued expansion strategy as well as its investment commitment to Pakistan as a key growth market and confidence in the prospects of the country’s telecommunications infrastructure market.

edotco, through Tanzanite, now incorporated as a subsidiary of edotco Pakistan Private Limited (edotco PK), has entered into an agreement with PMCL to acquire its tower subsidiary, Deodar Private Limited and its portfolio of over 13,000 tower assets.

As part of the transaction partnership, DH Corp will be investing a 45% equity stake in edotco PK with the remaining 55% control stake to be held by edotco.

DH Corp, listed on the Pakistan Stock Exchange, with a market capitalisation of approximately US$600 million (RM2.56 billion), is a conglomerate with a varied business portfolio which includes, fertilizers, foods, chemical storage & handling, trading, energy - including independent power production, renewables and petrochemicals.

[US$1 = RM4.26]

The total transaction consideration for the proposed acquisition is US$940 million, which will be funded through a combination of external local debt of US$600 million and an equity split of US$174 million by edotco and US$166 million by DH Corp for their respective stakes.

DH Corp chairman Hussain Dawood said: "Our group has a history of, and passion for, bringing FDI to Pakistan through joint ventures. We work tirelessly in developing the capacity and capability of industries that are critical to addressing key societal challenges. We believe this strategic collaboration with edotco, adds significant value to our commitment.”

In meeting with all of edotco’s firm inorganic expansion and merger & acquisition criteria, this proposed acquisition represents a significant expansion of edotco’s operations in Pakistan. At closing, the acquisition will lead to an enhanced portfolio of approximately 40,000 towers being operated and managed by edotco across the region, comprising approximately 32,000 owned and operated with a further 8,000 towers managed through a range of services provided.

Upon completion, edotco will reinforce its position as the largest independent tower company in Pakistan with a high-quality asset portfolio and PMCL as its anchor tenant. PMCL is Pakistan’s largest mobile network operator and through its Jazz brand provides a range of telecom services for over 53 million users.

The deal also comes with immediate financial accretion for edotco.

Axiata president and group chief executive officer Jamaludin Ibrahim says: “As the majority shareholder of edotco, Axiata strongly supports the proposed transaction which will further elevate its position as a leading independent tower company globally and bring strong financial accretion to the company. It will also help create a more balanced portfolio for edotco in having three operations of significant size and nature which are Malaysia, Bangladesh and Pakistan.

“I am very pleased with edotco’s growth in performance and footprint to date. This further drives our determination and focus towards making edotco a world-class business through operational efficiencies and scale.”

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