Telecommunications tower operator PT Solusi Tunas Pratama plans to raise Rp 2.6 trillion (US$214.23 million) from a rights issue to refinance loans and boost its working capital.

In the rights issue, the company planned to release 381.2 million new shares, equal to 32.4 percent of its total equity, at Rp 7,000 apiece, Solusi Tunas Pratama CEO Nobel Tanihaha said in a prospectus on Tuesday.

According to the prospectus, PT Kharisma Putra Prima will act as the standby buyer for the rights issue.

The prospectus also shows that Cahaya Anugerah Nusantara Holdings Limited, a major shareholder in Solusi Tunas, had expressed its willingness to purchase all of its share entitlement, while PT Kharisma Indah Ekaprima, the company'€™s controlling shareholder will take up 66 million of the new shares.

'€œThe share absorption by Kharisma Indah will be conducted as debt repayment as agreed in the Repayment Notice of Nov. 14, 2014. The amount of debt that will be paid off with the shares is Rp 462.5 billion,'€ Nobel said.

The company plans to allocate around 80 percent, or Rp 1.7 trillion, of the cash raised from the rights issue to refinance several bank loans, with the remaining 20 percent, or Rp 440.5 billion, to be used for working capital.

In October, Solusi Tunas signed an asset-purchase agreement with publicly listed cellular operator PT XL Axiata to acquire 3,500 telecommunications towers worth Rp 5.6 trillion. According to the agreement, the transaction will be paid for in cash.

Solusi Tunas director and corporate secretary Juliawati Gunawan had previously said that all the funds used to buy XL'€™s towers would come from bank loans. The purchase will bring the number of Solusi Tunas'€™ towers to 7,000 by year-end. The purchase also included the acquisition of XL'€™s tower tenants, she said.

The company expects its revenue to grow by more than 80 percent after the purchase is completed, with a concomitant rise in net profits.

'€œIn the long-term, the size of our tower portfolio will strengthen our position as one of Indonesia'€™s big-three independent providers of telecommunications towers,'€ she said.

In the first half of this year, Solusi Tunas posted Rp 511 billion in total revenue, an increase of 36.05 percent from Rp 375.58 billion in the same period last year. Tower rental fees from XL contributed the biggest portion of the revenue, amounting to Rp 140.57 billion.

In addition, rental fees from PT Bakrie Telecom contributed
Rp 81.48 billion and Telkomsel
Rp 66.73 billion, with other providers accounting for the remainder.

Previously, Solusi Tunas Pratama'€™s management said the company wanted to boost its fiber-optic business through increasing its loan facility to its subsidiary BIT Teknologi Nusantara to Rp 1.5 trillion from its initial plan of Rp 500 billion.

Both firms signed an agreement in January under which Solusi Tunas would provide a Rp 500-billion loan to support BIT'€™s fiber-optic business.

The loan facility is believed to have no maturity date and an unfixed-interest rate. The agreement was amended to allow the increase in the loan facility to Rp 1.5 trillion.

Nobel said previously that demand for fiber-optic networks in the country'€™s big cities would likely surge in three to five years, driven by growing use of long-term evolution (LTE) technology, better known as 4G, for Internet data use.

Fiber optic is considered to be the best medium for 4G as it has greater bandwidth, which can handle skyrocketing data traffic.

Indonesia'€™s digital universe (the amount of data traffic) is forecast to grow by more than six times, from 84 exabytes this year to 656 exabytes by 2020, according to a study conducted by the International Data Corporation and IT firm EMC.

Solusi Tunas'€™s shares, which are traded on the Indonesia Stock Exchange (IDX) under the code SUPR, closed unchanged at Rp 9,500 on Tuesday.

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