edotco Partners Dawood Hercules to Acquire about 13,000 Towers in Pakistan

edotco Group Sdn Bhd (“edotco”), a subsidiary of Axiata Group Berhad (“Axiata”), announced its biggest expansion plan to date with the proposed
acquisition of approximately 13,000 towers in Pakistan to solidify its position as one of the largest independent tower companies in the world. edotco is acquiring the towers from Pakistan Mobile Communications Limited (“PMCL”) together with Dawood Hercules Corporation Limited (“DH
Corp”), a leading listed investment conglomerate in Pakistan.

With its existing portfolio of over 26,000 towers owned and operated across six countries, the move will effectively place edotco as the eighth largest independent tower company and second largest multi-country tower operator globally1.

The proposed deal follows edotco’s recent successful acquisition of Tanzanite Tower Private Limited (“TTPL”) and its 700 towers. This reflects edotco’s continued expansion strategy as well as its investment commitment to Pakistan as a key growth market and confidence in the prospects of
the country’s telecommunications infrastructure market.

edotco, through Tanzanite, now incorporated as a subsidiary of edotco Pakistan Private Limited (“edotco PK”), has entered into an agreement with PMCL to acquire its tower subsidiary, Deodar Private Limited (“Deodar”) and its portfolio of over 13,000 tower assets. As part of the transaction partnership, DH Corp will be investing a 45% equity stake in edotco PK with the remaining 55% control stake to be held by edotco. DH Corp, listed on the Pakistan Stock Exchange, with a market capitalisation of approximately USD600 million2 , is one of the country’s largest conglomerates with a varied business portfolio which includes, fertilizers, foods, chemical storage & handling, trading, energy – including independent power production, renewables and petrochemicals.

The total transaction consideration for the proposed acquisition is USD940 million, which will be funded through a combination of external local debt of USD600 million and an equity split of USD174 million by edotco and USD166 million by DH Corp for their respective stakes. In meeting with all of edotco’s firm inorganic expansion and merger & acquisition criteria, this proposed acquisition represents a significant expansion of edotco’s operations in Pakistan.

At closing, the acquisition will lead to an enhanced portfolio of approximately 40,000 towers being operated and managed by edotco across the region, comprising approximately 32,000 owned and operated with a further 8,000 towers managed through a range of services provided. Pakistan is noted to be one of the region’s fastest growing telecommunications infrastructure markets. As mobile penetration stands at around 73% and data penetration at around only 24%, Pakistan’s telecommunications industry growth potential remains strong for a population of over 200 million.3 In addition, its well-regulated telecommunications policies favour and promote infrastructure sharing making it an attractive investment for telecom infrastructure investors.

Upon completion, edotco will reinforce its position as the largest independent tower company in Pakistan with a high-quality asset portfolio and PMCL as its anchor tenant. PMCL is Pakistan’s largest mobile network operator and through its Jazz brand provides a range of telecom services for
over 53 million users.

The deal also comes with immediate financial accretion for edotco. Commentary Datuk Azzat Kamaludin, Chairman of edotco said: “With its strong business fundamentals and long-term potential, this acquisition marks a very significant expansion to edotco’s regional footprint and puts edotco firmly within the top 10 tower companies globally.”

Suresh Sidhu, Chief Executive Officer of edotco Group, said: “We are pleased to be able to consolidate our expansion into Pakistan with this acquisition. The acquisition of Deodar is a critical part of our growth strategy and ambition to position edotco as the leading independent telecommunications infrastructure services provider in Asia. With Dawood Hercules as our partner, we are confident in the potential of the market in Pakistan and will continue to demonstrate our long-term commitment to supporting the development and enhancement of the country’s telecommunications infrastructure.”

Tan Sri Jamaludin Ibrahim, President & Group Chief Executive Officer of Axiata, added: “As the majority shareholder of edotco, Axiata strongly supports the proposed transaction which will further elevate its position as a leading independent tower company globally and bring strong financial
accretion to the company. It will also help create a more balanced portfolio for edotco in having three operations of significant size and nature which are Malaysia, Bangladesh and Pakistan. I am very pleased with edotco’s growth in performance and footprint to date. This further drives our determination and focus towards making edotco a world-class business through operational efficiencies and scale.”

Hussain Dawood, Chairman of Dawood Hercules Corporation said: “Our group has a history of, and passion for, bringing FDI to Pakistan through joint ventures. We work tirelessly in developing the capacity and capability of industries that are critical to addressing key societal challenges. We
believe this strategic collaboration with edotco, adds significant value to our commitment.”

Inam ur Rahman, Chief Executive Officer of Dawood Hercules Corporation, said: “This partnership with edotco Group furthers our long term commitment to technology infrastructure development in Pakistan through partnerships with top international organisations. edotco are regional leaders in the telecom tower infrastructure and we believe that their first foray in to Pakistan will give the necessary impetus to our telecommunications sector to match best in class global players.”

Subject to the customary and regulatory conditions precedent being fulfilled, the acquisition is scheduled to be completed in the fourth quarter of 2017.

1 Based on Tower Exchange ‘Journal of the Telecom Tower Industry’ – Issue 19, May 2017

2 USD600 million as of 23 August 2017

3 Pakistan Telecommunications Authority Annual Report 2016

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About edotco Group
Established in 2012, edotco is the first regional and integrated telecommunications infrastructure services company in Asia, providing end-to-end solutions in the tower services sector from tower leasing, co-locations, build-to-suit, energy, transmission and operations and maintenance (O&M).
edotco operates and manages a regional portfolio of over 26,000 towers across core markets of Malaysia, Myanmar, Bangladesh, Cambodia, Sri Lanka and Pakistan with 18,461 towers directly operated by edotco and a further 8,100 towers managed through a range of services provided.

edotco strives to deliver outstanding performance in telecommunications infrastructure services and solutions. Its state-of-the-art real time monitoring service, echo, has already seen improvements in field operations while maximizing operational efficiencies in terms of battery, energy and fuel consumption for telecommunications infrastructure.

edotco Group was recently awarded the Frost & Sullivan 2016 Southeast Asia Telecoms Tower Company of the Year Award for its demonstrated exemplary business growth and performance in Southeast Asia. For more information, visit www.edotcogroup.com

About DH Corp.
Dawood Hercules Corporation Limited (DH Corp) is a holding company founded on family values with diversified business interests. It is listed on the Pakistan Stock Exchange, with a market capitalization of approximately USD600 million. DH Corp is a partner in Pakistan’s growth and prosperity, and this ethos serves as the foundation of our business operations. The strongest drivers of Pakistan’s economic growth are therefore the core areas of investment for our group. This allows us to deploy capital and invest in people and partnerships over a long period of time to solve some of the most pressing issues the world is facing today in a manner that is available, affordable and sustainable.