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Sarana Menara may see slower growth
Publicly listed tower company PT Sarana Menara Nusantara expects a slower growth revenues and earnings this year as demand for new towers is predicted to grow only moderately
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ublicly listed tower company PT Sarana Menara Nusantara expects a slower growth revenues and earnings this year as demand for new towers is predicted to grow only moderately.
Sarana Menara president director Adam Gifari said Thursday his firm was expecting to pocket some Rp 4.31 trillion (US$332.5 million) to Rp 4.6 trillion this year ' between a 5 and 12 percent increase from last year's revenues of Rp 4.1 trillion.
The expected growth is less than the 28.1 percent increase in revenues seen between 2013 and 2014, when revenue rose from Rp 3.2 trillion Rp 4.1 trillion.
The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) is forecast to grow to between Rp 3.59 and Rp 3.83 trillion this year, up from Rp 3.42 trillion last year. The estimated growth is far lower than the 29.06 percent growth in EBITDA recorded from 2013 to 2014.
Adam said that while cellular operators were now rolling out 4G services to provide faster Internet access for consumers, demand for new telecommunications towers could not be ascertained.
'The opportunity [for growing demand] is there, but there's a dynamic situation in the industry. Operators used to build or rent new towers for 2G and 3G networks. When they adopt 4G, it doesn't necessarily mean they need new towers,' he said.
Alexander Rusli, president director of cellular operator PT Indosat, previously said that most of Indosat's modernized towers were 4G-ready, suggesting it may not require large investments to build new 4G towers.
Sarana Menara's Adam said that despite headwinds in the industry, he hoped prospects for the tower-building sector would remain bright, as a growing cellular phone market could create strong demand for telecommunications towers.
Research firm Frost & Sullivan has predicted that the number of telecommunications towers in the country would grow annually by 8 percent, reaching 89,409 units this year, up from 55,972 units in 2011.
By the end of last year, Sarana Menara itself owned a total of 11,595 towers, with 20,138 tenants.
Adam declined to disclose his firm's expansion plan this year, saying his firm built new towers as ordered from operators.
'We can't provide specific details on where our revenue growth this year will come from, but it could be from co-locations, new towers or acquisitions,' he said.
In another set of developments, two tower companies ' PT Tower Bersama Infrastructure and PT Solusi Tunas Pratama ' have announced deals with the country's major telecommunications tower builders.
Tower Bersama has signed a share-swap agreement with Telkom, under which Tower Bersama will wholly own the latter's tower business, PT Dayamitra Telekomunikasi (Mitratel).
Once the swap is finalized, the number of towers owned by Tower Bersama is forecast to hit 15,194 units with 22,391 tenants, according to investment group CLSA.
Solusi Tunas, meanwhile, has officially acquired 3,500 XL towers in a deal worth Rp 5.6 trillion.
Adam declined to comment on the competition with other telecommunications companies, saying the tower construction business in the country remained promising.
Sarana Menara's shares, which are traded on the Jakarta Stock Exchange (IDX) under the code TOWR, remained unchanged at Rp 4,000 apiece at Friday's close.
