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Japan’s Sojitz infuses multi-million dollar investment in PHL tower builder

The Japanese press recently went on a frenzy over its country’s 150-year-old company’s move to underwrite approximately $61.36 million in equity in LBS Digital Infrastructure Corp. (LBSD), a wholly owned Filipino tower company.

Market analysts view this latest Sojitz Corp.’s maneuver as a sign of an economic boom in the rapidly growing Philippine telecom sector. Sojitz could not have chosen a better tower company. LBSD has been one of the country’s leading cell tower builders, which has practically built and operated majority of the industry’s cell towers.

In its marker disclosure, Sojitz sees significant growth in the country’s telecom market. It regards the industry as one of the most promising markets in Asia in terms of the telecom tower business.

By entering the tower business at this early stage, LBSD aims to secure its position as one of the Philippines’ largest tower operators. LBSD’s business expansion will leverage its access to abundant pre-identified potential tower sites in the Philippines and its established record of tower design and construction together with Sojitz’s management resources.

Global usage of smart phones and 5G has resulted in mobile carriers shifting their means of differentiation from infrastructure to services and content. Expanding telecom tower businesses will make it possible for mobile carriers to quickly and efficiently invest in infrastructure for building their own networks in order to offer mobile users an improved standard of living with extensive network offerings. The telecom tower sharing to be promoted by Sojitz and LBSD will consolidate various telecom towers constructed by the country’s mobile carriers in order to reduce capital investment costs and preserve the landscape.

The Philippines holds the record for the world’s highest daily Internet usage with an average of 10 hours a day. Although the country shows a strong demand for data communications, the Philippines has a lower ratio of telecom towers relative to its population in comparison to neighboring countries. At present, there are delays in the establishment of telecommunication environments across the archipelago. Having just started full 5G deployment, the country is expected to see an even greater demand for telecom towers and small poles moving forward.

By leveraging on its extensive experience and know-how, Sojitz will be able to establish telecom tower infrastructure in the Philippines that will improve the Filipinos’ quality of life. At the same time, Sojitz aims to expand the telecom tower business to other regions and related business fields. The installation of carbon fiber towers manufactured by Sojitz Group subsidiary IsoTruss will result in added value to LBSD’s telecom tower business. The carbon filter towers ii IsoTruss are lightweight but strong and resistant to corrosion, collapse and other forms of damage that the country’s frequent typhoons may bring.

With the government’s improved common-tower policy, foreign and local tower builders have been intensely jockeying for a spot in this highly competitive business.

The common-tower policy, originally proposed by then presidential adviser for telecommunications Ramon ‘RJ’ Jacinto, was spurned by the industry. Jacinto wanted telecom firms to rent their respective towers from a single tower company, a move that industry members found to be inimical to their best interest.

On May 29 last year, the Department of Information and Communications Technology (DICT)  revised the policy and issued a circular (DC 008, s. 2020) containing guidelines on a Shared Passive Telecommunications Tower Infrastructure, which is intended to foster growth and development of Independent Tower Companies (ITCs) and promote shared passive telecommunications groundwork, aimed at accelerating growth in Philippine telecommunications.

Telecom companies welcomed the enhanced policy since it allows them to decide which among a slew of tower builders they can best partner with. Cost-wise, the common tower policy benefits the industry. By leasing from ITCs, they do not have to build and maintain their own cell towers.

Since the ITCs will solve the lack of cell towers, which has been cited for the slow Internet connectivity in the Philippines, telecoms can now concentrate on their main business of providing fast and reliable Internet which will help bring the country in step with 21st century technology.

According to PLDT and Smart President and CEO Alfredo Panlilio, even before this initiative on sale and lease back project, “we [have already] started a process called common tower for future build-out of new towers. We’ve come up with almost a year-and-a-half process of identifying three partners and that has been approved in the Board on November 5. Three entities are building out 1,600 towers for the next year for us.” He adds that government initiatives, such as the streamlining of permitting guidelines and future plans of creating ‘One-Stop Shops’ in LGUs for the processing of all kinds of permits, will help expedite the expansion of Smart’s network across the country, particularly fiber. “PLDT’s fiber infrastructure is the country’s most extensive at around 615,000 kilometers as of end-September and also supports Smart’s mobile network, serving 96 percent of the population from Batanes to Tawi-Tawi,” he says.

Globe Telecom’s Yoly Crisanto, the company’s SVP for Corporate Communications, told BusinessWise that the telecom firm has signed manufacturing license agreements with several ITCs: “As they learn how to navigate through the process of identifying, acquiring, and building new sites, we expect more aggressive builds coming from them moving forward. Our goal is to make them a significant partner of our builds. This is progressively being done.”

With the emergence of ITCs, some analysts see the sale of telcos’ existing cell towers as a potential revenue. Crisanto lauds the idea. “Globe keeps its options on its passive infrastructure open,” she explains. “We are always on the lookout to monetize our passive assets and shifting these into active investments. For now, we are focusing our efforts on enabling the built-to-suit initiatives of our ITC partners. We will update the market if and when we are ready to act on our tower infrastructure.”

Will the era of slow, exasperating Internet connectivity be a thing of the past? Sojitz investment in LBSD foretells a bright future for the country’s telecom sector. Business Mirror

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