LBS Digital-sojitz partnership–a boon to telecom sector

Market analysts view the Ldicsojitz partnership as a sign of an economic boom in the rapidly growing Philippine telecom sector. In its market disclosure, Sojitz pointed out 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.

Now that the partnership between LBS Digital Infrastructure Corp. (LDIC)—A home-grown tower company—and Sojitz Corp., a 150-year-old Japanese telecom firm has been fully cemented, the speed that cell towers will be built in the country is expected to accelerate at full throttle.

In an exclusive interview with Businesswise, company president and chief executive officer Ramoncito S. Yu III said that LDIC, which manages the joint venture concern, is gearing for a mega-tower transaction through mergers and acquisition and accelerating its vision of achieving within three years a massive 10,000-tower ownership via a potential sale-and-leaseback acquisition.

LDIC, Yu said, has been “preparing for any potential acquisition with at least a minimum of between $1 billion and $2 billion in additional funding.” The company is still fully committed and focused on building the 550 towers to support the 70,000 tower requirements in the Philippines. He added that they are prepared to offer “a compelling price and proposition for opportunities to acquire and operate existing towers from mobile network operators.”

Before the partnership, LDIC was a founder-led digital infrastructure specialist company in the Philippines with a heritage of over 20 years in the telecom tower sector. The joint venture has leapfrogged since it kicked off operation in February 2022. It recently established a highly advanced tower infrastructure command center and headquarters in Bonifacio Global City (BGC).

Based on company records shown to Businesswise, the company—in just three months of operations —has started building cell towers nationwide in 28 provinces or 34 percent of the country’s provinces, namely, Aklan, Albay, Antique, Aurora,

Basilan, Batangas, Benguet, Bulacan, Cagayan, Camarines Sur, Capiz, Cavite, Davao Del Sur, Ifugao, Iloilo, Isabela, Kalinga, Maguindanao, Mindoro, Negros Occidental, Nueva Ecija, Nueva Vizcaya, Occidental Mindoro, Palawan, Pangasinan, Quirino, Zambales, and Zamboanga del Sur. By offering attractive ground lease rates and competitive terms and rates to construction contractors, the company aims to cover soon all the regions of the country.

LDIC’S wherewithal is buoyed by a secure, long-term partnership with Sojitz, which is underwriting approximately $61.36 million (P1.3 trillion) in LDIC equity. One of the largest trading and investment companies in Japan, Sojitz has a worldwide network of approximately 400 subsidiaries and affiliates. LDIC has also obtained support from five of the country’s biggest banks and one multinational bank.

Another telco joining the partnership is MIRAIT Philippines, a joint venture between Japan KTK Telecoms and Fujikura Ltd. In its two decades of operations in the Philippines, MIRAIT has become a key provider of choice for the design and installation prerequisites of major telco players.

Market analysts view the Ldicsojitz partnership as a sign of an economic boom in the rapidly growing Philippine telecom sector. In its market disclosure, Sojitz pointed out 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.

LDIC aims to secure its position as one of the Philippines’s largest tower operators. Its 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, bolstered by Sojitz’s management resources.

With the global usage of smart phones and 5G, mobile carriers have shifted their means of differentiation from infrastructure to services and content. The expansion of telecom tower businesses will enable mobile carriers to quickly and efficiently invest in building their own networks, which will increase their network offerings and raise their consumers’ standard of living. The telecom tower sharing to be promoted by Sojitz and LDIC 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. Despite its strong demand for data communications, the Philippines has a lower ratio of telecom towers relative to its population, when compared 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 move forward with an even greater demand for telecom towers and small poles.

In establishing telecom tower infrastructure in the Philippines and growing the business to other regions and fields, Sojitz is leveraging on its extensive experience and know-how. The installation of carbon fiber towers manufactured by Sojitz Group subsidiary Isotruss will result in added value to LDIC’S telecom tower business.

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. Originally proposed by then presidential adviser for telecommunications Ramon ‘RJ’ Jacinto, the commontower policy was then 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 revised the policy and issued a circular (DC 008, s. 2020) containing guidelines on a Shared Passive Telecommunications Tower Infrastructure, which sought to foster growth and development of independent tower companies (ITCS) and promote shared passive telecommunications groundwork to accelerate growth in Philippine telecommunications.

Telecom companies welcomed the enhanced policy that 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.

Lack of cell towers has been identified as the reason for turtle-slow Internet connectivity in the Philippines. With these ITCS, telecom firms can now concentrate on their main business of providing fast and reliable Internet, which will go a long way in keeping the country in step with 21st century technology.