KARACHI: TPL Properties Ltd said on Tuesday one of its wholly owned subsidiaries has joined a consortium to buy a telecom tower infrastructure company.
Even though the regulatory filing didn’t give out any financial details, a source privy to the deal told Dawn the size of the transaction is “Rs100 billion-plus”.
TPL REIT Management Company Ltd has participated in the auction through an Infra REIT, a real estate investment trust that collects money from investors and uses it to develop an infrastructure project that has some public utility. It’s going to be the first infrastructure REIT in Pakistan.
The other strategic investor in the consortium is TASC Towers, a UAE-based operator of more than 14,000 mobile telecom towers in multiple geographies.
The deal is backed by “one of the biggest banks” that’ll provide debt structuring advisory and arrangement services. Separately, the consortium’s strategic investors are holding discussions with “several international institutions to raise equity for the equity component required for consummation of this transaction”. The two parties will also be exploring the opportunity to acquire more telecom tower assets in the near future.
Requesting anonymity because it wasn’t authorised to share financial details with the press, the source said the transaction will result in the telecom tower infrastructure company controlling “more than 25 per cent” of all mobile towers located across the country. Their total number is north of 40,000.
“Each mobile network operator (MNO) operates on average 10,000-11,000 towers. The four players collectively operate more than 80pc of all towers. The deal aims to reduce the share of MNOs in that segment so that they can concentrate on their core business instead,” the source said.
Engro Enfrashare and Edotco Pakistan are currently the major non-MNO players in this line of business. They control around 1,800 and 1,600 sites, respectively, according to their websites.
Towards the end of June, TPL REIT Management achieved the first financial close of Rs18.35bn in TPL REIT Fund I. TPL Properties contributed Rs7.1bn of the land value to the fund in the form of investment property called the initial asset portfolio. The remaining amount of Rs11.25bn was raised through the eight banks that served as anchor investors.
The initial funds are being deployed in financing the development costs of the initial asset portfolio, which includes a technology park in Korangi, a 30-floor high-end residential tower in Karachi’s financial district, and a gated residential community on 40 acres in Korangi Creek.
A REIT operates like any other company but offers more transparency to investors. All assets under a REIT are controlled by a trustee instead of its majority shareholder. The entity must list on the stock exchange within three years of its financial close, thus letting small investors take exposure to an otherwise
capital-intensive real estate market. Post-listing, REIT units are traded on the stock exchange just like ordinary shares.
Published in Dawn, September 21st, 2022