ADB approves P4.8-B loan for telco towers

The Asian Development Bank approved a total of P4.8-billion loan to iSON Tower Limited Inc.  for the construction and operations of up to 800 telecommunications towers nationwide to be used by Globe Telecom and Smart Communications Inc.

The ADB said it approved the loan to iSON last Thursday to help the country provide technology-based economic opportunities to all Filipinos through private sector-led projects.

"Access to the digital economy is one of driving forces for inclusive growth in remote underserved regions as it promotes the mobility of the population from less-productive sectors to better economic opportunities and improves productivity," the ADB said in a statement last Thursday.

Ordinary capital resources

It said the loan will be sourced from the bank's ordinary capital resources and parallel loan support amounting to P2.4 billion each.

The terms of the loan, according to ADB, require the telecommunication towers to reach certain earnings levels and the borrower company to implement measures for the financial impact and protection of the environment and social welfare of the communities where the towers will be built.

"Towers that are completed and earning revenues from mobile network operators will be eligible for financing subject to predefined environmental, social, development, and financial criteria. Once ADB confirms that these conditions have been satisfied, lenders will disburse up to an aggregate of P4.8 billion (approximately $84.9 million)," ADB said.

"Each drawdown will be right-sized in line with project milestones and contracted cashflows achieved," the multinational lender said.

iSON will identify areas suitable for the tower construction based on the predetermined scope of areas where Globe and Smart need to establish connectivity.

The two telecommunications firms will then install their equipment on the towers, while iSON Tower Limited Inc. will be leasing land of the tower sites for 15 years.

Land owners to earn income

In this way, land owners, including indigenous peoples, for the tower sites will be earning an income, ADB said.

"The construction and operation of a tower in these areas will not entail physical displacement, commercial use of cultural resources and adverse impact on their livelihood and their cultural and spiritual uses of land. The indigenous people groups hosting the towers will instead earn from land rental and site caretaking fee," the ADB explained.

In another aspect, the ADB said the tower company must still update its standards to minimize effects on the environment from operating the towers.

"While it has implemented procedures to ensure compliance with environmental, health, and safety regulatory standards, there are gaps when compared to ADB's environmental safeguards requirements," the bank said.

These qualifications for ADB financing are included in ADB's Safeguard Policy Statement of 2009 and the Indigenous Peoples' Rights Act.