Pinnacle Towers, a Singapore-headquartered telecommunications infrastructure company backed by KKR, is selling a minority stake to expand its operations in the Philippines, three sources familiar with the situation said.

According to two of the sources, Pinnacle hired Greenhill to advise on the deal. It is selling a stake of between 10% to 25%, which is a mix of primary and secondary shares. Some of the proceeds may go into organic growth, the first source said, without elaborating.

In March, KKR announced that it injected an additional USD 400m into Pinnacle Towers to acquire 2,000 towers in the Philippines after it first invested an undisclosed sum in the company in 2020. Pinnacle acquired 1,012 towers from local telecommunications firm PLDT [PSE:TEL] and 3,529 towers from the latter’s rival Globe Telecom [PSE:GLO], through primary subsidiary Frontier Tower Associates Philippines in 2023 and 2022, respectively.

Earlier this month, Frontier Tower acquired the 100% stake held by CREI Management Services FZE (CREI) in PH1 Holding FZ-LLC, a UAE-based entity and the parent company of Communication and Renewable Energy Infrastructure CREI Phils Inc (CREI Phils) in the Philippines. This increased Frontier’s existing portfolio of 5,000 towers in the Philippines by 400.

A sector advisor said there is consolidation happening in the Philippines cellular tower space since an operator needs a larger portfolio of towers to gain economies of scale and boost free cash flow in a market with too few customers. A second sector advisor said making money in this industry is challenging, explaining that the economics of independent tower operations in the Philippines may not be compelling enough given that the country has been a virtual duopoly between PLDT and Globe for decades.

DITO CME Holdings Corp (DITO), the operator of telco DITO Telecommunity, is playing catch-up with PLDT and Globe and it only has 12% market share as of October, according to media reports.

KKR, Pinnacle, and Greenhill did not respond to requests for comments.