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Indosat Ooredoo strikes $750M tower sale deal, one of the largest in Asia
The current pandemic has accelerated the digital transformation across entire industries. The telecommunication industry is no exception. With remote working, video conferencing, and digital collaboration having become the new normal, telecom companies have to meet increasing consumer demand for reliable connectivity.
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he current pandemic has accelerated the digital transformation across entire industries. The telecommunication industry is no exception. With remote working, video conferencing, and digital collaboration having become the new normal, telecom companies have to meet increasing consumer demand for reliable connectivity. Simultaneously, they are under pressure to be more agile and more focused on new business models and find new ways of working to deliver sustainable growth.
The digital transformation, then, is the catalyst for each telecom company to turn these challenges into opportunities, and to do so better than the others.
One approach to this is tower sale and leaseback transactions to maximize asset monetization. Such a move provides additional financial flexibility for a telecom company to support an aggressive network expansion and alleviate near-term pressure on free cash flow.
Combined with a solid business strategy, a telecom company will have more room for maneuver to sustain, grow and rise above its competitors in the market.
With the sale, a telecom company can gain a competitive edge by focusing on new business models that prioritize operational efficiencies, ensure agile ways of working, discover novel revenue growth opportunities and improve digital maturity.
PT Indosat Tbk. (Indosat Ooredoo), Indonesia’s leading digital telecommunications provider, recently announced the signing of a sale and leaseback agreement with PT EPID Menara AssetCo (Edge Point Indonesia) for more than 4,200 telecommunication towers.
Edge Point Indonesia is an Indonesian subsidiary of Edge Point Singapore, wholly owned by US-based Digital Colony. With $25 billion in assets under management, Digital Colony is a global digital infrastructure investor with extensive experience in owning and operating cellular towers.
Indosat Ooredoo has agreed to sell the towers in a transaction valued at $750 million, including a supplementary offer, making it one of the largest deals of its kind in Asia.
The tower sale is intended to unlock the capital required to build on Indosat Ooredoo’s strong growth momentum through further improvements to its network performance, along with the launching of innovative digital solutions to enhance the customer experience.
The sale is part of Indosat Ooredoo’s turnaround strategy, which has refocused the business on digital products and services and sought to create optimal value from its infrastructure. Monetizing its quality portfolio of telecommunication towers is a key pillar of Indosat Ooredoo’s current strategy.
Ahmad Al-Neama, President Director and Chief Executive Officer of Indosat Ooredoo, said in a statement that he was delighted that Indosat Ooredoo had agreed to the deal with Edge Point Indonesia, which he noted had been planned for a long time and was in line with Indosat Ooredoo’s turnaround strategy to create more value for shareholders and customers.
“The deal marks the third and final sale of assets from Indosat Ooredoo’s high-quality tower portfolio that moves us towards a more asset-light model and greater focus on delivering outstanding mobile digital services to our customers. I would like to thank the Government of Indonesia for creating a policy environment that has enabled the telecoms industry to thrive and attract high-quality investors, such as Edge Point Indonesia. Increasing investment into the sector will ultimately benefit customers and the Indonesian people,” he said.
Suresh Sidhu, Chief Executive Officer of EdgePoint Group, welcomed the transaction: “This deal is one of the largest of its kind in Asia and vaults us into a position as one of the leading tower providers in Indonesia. We are delighted to have further strengthened our strategic partnership with Indosat Ooredoo, which has been developing over several years. This transaction also sees us form a technical partnership with Centratama, in order to ensure we provide Indosat Ooredoo with the best services. The addition of 4,247 towers to this partnership will significantly strengthen our business and create value for all our stakeholders. EdgePoint and Centratama would also like to thank Digital Colony and Northstar, respectively, for making this opportunity possible.”
Edge Point Indonesia was declared the winning bidder of a competitive tender conducted by Indosat Ooredoo, with J.P. Morgan acting as financial advisor to Indosat Ooredoo throughout the transaction.
The transaction is expected to close in the second quarter of 2021, although it is subject to customary conditions including shareholder approval by Indosat Ooredoo at an extraordinary general meeting scheduled for May 6.
If agreed, Indosat Ooredoo will lease back space on the towers for a period of 10 years to meet its ongoing requirements.
Ahmad expressed his confidence that the leaseback agreement would continue to meet Indosat Ooredoo’s ongoing tower needs, while the capital would provide further fuel to power our growth momentum in 2021.
“Indosat Ooredoo and Edge Point Indonesia will work closely together going forward and build a strong and long-lasting strategic partnership.”
