U Mobile, Malaysia’s fourth largest wireless carrier, has been named in press reports from Bloomberg noting that it “is considering the sale of its telecommunication towers” for $120m USD (500 million Malaysian ringgit). Presently, U Mobile owns 1.6k wireless towers, implying a valuation for its sites of $74.5k USD per tower. Furthermore, U Mobile is reportedly “in talks” to sell its tower infrastructure to buyers including EdgePoint Infrastructure, owned by DigitalBridge’s private equity fund Digital Colony Partners II, as well as edotco, a regional tower company in Asia.
Proceeds from the sale of its tower infrastructure would enable U Mobile to invest in its 5G roll-outs in the cities of Kuala Lumpur and Putrajaya by year-end 2021, and nationally by 2023. Finally, U Mobile’s key shareholders include Singapore’s Temasek, through Straits Mobile Investments (~48%) and Vincent Tan, a Malaysian-Chinese billionaire (~22%).
Below we review the two potential buyers of U Mobile’s 1.6k towers in Malaysia, namely EdgePoint Infrastructure and edotco.
EdgePoint Infrastructure – Challenges for U Mobile’s Towers
EdgePoint Infrastructure has amassed a portfolio of 10.0k+ tower sites across both Indonesia (~9.0k sites) and Malaysia, which together comprise:
- Indosat Ooredoo: 4.2k towers in Indonesia through a sale-and-leaseback transaction
- Centratama: 4.7k towers and DAS sites in Indonesia, through a take-private deal
- Asiaspace: 178 towers in Malaysia by purchasing the company’s towers
- GTP Network: ~1.0k+ towers in Malaysia through the acquisition of GTP Network and one other undisclosed transaction
With an acquisition of U Mobile’s towers in Malaysia, DigitalBridge’s EdgePoint Infrastructure would be continuing to pursue its theme of consolidating tower markets in Southeast Asia.
Malaysia Towers Map – EdgePoint Infrastructure
DigitalBridge’s private equity fund, Digital Colony Partners II, and Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund, own EdgePoint Infrastructure. Specifically, Digital Colony Partners II has a 65.9% ownership interest, while Abu Dhabi Investment Authority (ADIA) holds a 34.1% stake.
Finally, as of May 31, 2021, EdgePoint Infrastructure’s total equity capital was $671m USD.
edotco Malaysia – Defends Leadership Position
edotco has a portfolio of 16.2k towers and managed sites in Malaysia. Specifically, the company has 4.7k owned towers and 11.5k managed towers, primarily for wireless carrier Celcom (owned by Axiata). Additionally, edotco’s owned towers have a tenancy ratio of 1.98x, equating to 9.3k tenants with equipment on its owned towers.
Asia Towers Map – edotco
Over the past 12 months, edotco has only added 92 owned towers to its Malaysia portfolio, on a net basis.
Malaysia Towers Market – edotco, EdgePoint, U Mobile and More
Overall, Malaysia has ~25k towers, which are owned by both independent tower companies and wireless carriers. Beyond edotco, EdgePoint Infrastructure, and U Mobile, other major owners of towers in Malaysia include YTL, Sacofa, and OCK Group, as well as wireless carriers Maxis and DiGi.