Pakistan operator Jazz has signed an agreement for the sale of its tower business for USD 940 million to Tanzanite Tower, a company owned by Edotco Group and Dawood Hercules.
According to Edotco, with its existing portfolio of over 26,000 towers owned and operated across six countries, this acquisition will place Edotco as the eighth largest independent tower company and second largest multi-country tower operator globally. As part of the transaction, Dawood Hercules will buy a 45 percent equity stake in Edotco Pakistan, with the remaining 55 percent held by Edotco.
The towers transaction will be on a cash- and debt-free basis, for a total consideration of PKR 98,700 million (approximately USD 940 million). The enterprise value represents a high single digit multiple of contributed annual EBITDA, according to Veon and Global Telecom, the parent companies of Jazz, Pakistan's largest mobile operator.
According to Edotco, at closing, the acquisition will lead to an enhanced portfolio of 40,000 towers operated by the company across the region, comprising 32,000 owned and operated and a further 8,000 managed through a range of services provided.
At completion of the sale, Deodar will enter into a master services agreement with Jazz, to continue providing tower services to Jazz. The initial term of this MSA is twelve years and is renewable at Jazz's discretion for three consecutive periods of five years each.
Jazz will use the proceeds from the transaction for general corporate purposes, the funding of recently awarded spectrum and repayment of part of its outstanding debt. A total PKR 69,930 million of the PKR 79,800 million cash consideration is expected to be received at closing, while the remainder will be paid in the next 12 months.
Completion of the transaction is subject to the satisfaction or waiver of certain conditions including receipt of customary regulatory approvals. Completion of the transaction is expected to occur by end-2017.
As a result of the terms of the Jazz/Warid earn-out agreement, following the completion of the transaction, Global Telecom's stake in Jazz will be 83 percent.
