News Article

Indosat mulls selling off $300m of telecom towers

Indosat to save on costs, is expected to lease back infrustructure

Indosat Ooredoo, an Indonesian telecom company, has launched discussions to sell 3,000 telecom tower properties, individuals acquainted with the project has told DealStreetAsia.

The total transaction value is expected to be up to $300 million, said one of the sources mentioned above. The figure that takes into account the average cost of about $100,000-200,000 per tower. The assessment for each building, however, will differ among other elements based on its place and tenancy.

It is recognised that some prospective customers, both overseas and local, have already begun getting interested in the business. The selected bidders are still uncertain, however, since the method did not enter the second round of talks.

Turina Farouk, SVP, Indosat Ooredoo’s Head of Corporate Communications, refused to report on the growth when approached. She noted, however, that the company has “some alternatives for long-term maximisation of its business value.” On the other side, an email sent to JP Morgan did not elicit a reply.

According to a press study, Indosat Ooredoo allegedly highlighted a slew of alternatives to increase internal resources over the next three years to meet a maximum of $2 billion in capital spending. The company’s CEO Chris Kanter then identified specific alternatives such as granting corporate bonds or privileges, collecting extra funds from its shareholders, or adhering to the purchase of telecom roofs.

Indosat Ooredoo will need IDR 10 trillion ($706.75 million) of capital expenditure in 2019 alone, which will be used primarily to bring a maximum of 18,000 base-transceiver stations (BTS), the press study introduced.

If discussions are fruitful, it is anticipated that Indosat Ooredoo will perform a sale-leaseback operation for its telecom facilities after the selling phase has been finished-as is the sector procedure. The change will assist decrease the company’s expense of keeping telecom roofs alone, said critics.

Earlier, Indosat Ooredoo purchased as many as 2,500 telecommunications towers to Tower Bersama Infrastructure and its subsidiary Solusi Menara Indonesia in February 2012. It is reported that the contract valuation was then pegged at about IDR 4.76 trillion or $519 million.

The firm is presently renting out some rooms for ten years out of the sum of 2,500 telecom buildings. As described in the 2018 annual report of Indosat Ooredoo, the monthly lease cost is $1,300 per room box.

Indosat Ooredoo booked an Operating Revenue IDR 6.05 trillion and an EBITDA IDR 2.07 trillion in 1Q-2019. The firm observed a market cap of IDR 14.4 trillion.

 

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