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Indosat Ooredoo sells 4,200 towers worth $750m to Edge Point
Indonesia's third-largest telco firm sold the towers to raise capital in expanding its 4G network amid tightening market competition.
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ublicly listed PT Indosat, Indonesia’s third-largest telecommunications firm, recently sealed a deal to sell more than 4,200 towers worth US$750 million in raising capital to expand its internet network in the country.
Indosat sold the towers to Edge Point Indonesia, a subsidiary of Edge Point Singapore, which won a tender. The transaction is expected to close in the second quarter of this year, awaiting Indosat shareholders’ approval during a meeting slated for May 6. Indosat would lease back the towers for 10 years to meet its own operational requirements.
Indosat, which owns the Indosat Oreedoo brand, needs the capital to install fiber optic cables and add base transceiver stations (BTS) to expand its 4G network in Indonesia. The company allocated Rp 8 trillion in capital expenditure this year to install such infrastructure.
“[Indosat’s sale] would provide additional financial flexibility to support an aggressive network expansion and alleviate near-term pressure on free cash flow,” wrote credit rating agency Fitch Ratings in a Wednesday statement.
Indosat is in intense competition with Telkomsel and XL, respectively the country’s biggest and second-biggest telcos, to meet rising data demand in Indonesia, especially after mobility restrictions propelled demand for online services.
Read also: Telcos to benefit long term from COVID-19 crisis as users shift online
However, Indosat booked a Rp 716.7 billion net loss last year, turning around a Rp 1.56 trillion net profit from the previous year, when the company sold off 3,100 towers worth Rp 6.39 trillion to PT Dayamitra Telekomunikasi (Miratel), a subsidiary of Telkomsel, and to PT Profesional Telekomunikasi Indonesia (Protelindo), a subsidiary of listed telco tower operator PT Sarana Menara Nusantara.
“The deal marks the third and final sale of assets from Indosat Ooredoo’s high-quality tower portfolio that moves us toward a more asset-light model and greater focus on delivering outstanding mobile digital services to our customers,” Indosat Ooredoo president director Ahmad Al-Neama was quoted in a news release as saying on Tuesday.
The sale also turned Edge Point Group’s parent company, United States-based Digital Colony, into the fourth-largest independent tower operator in Indonesia behind Protelindo, PT Tower Bersama Infrastructure and PT Solusi Tunas Pratama, tightening competition in the domestic tower industry, added Fitch Ratings.
“This deal is one of the largest of its kind in Asia and cements our position as a leading tower provider in Indonesia,” said Edge Point Group chief executive Suresh Sidhu.
Read also: Indosat’s loss widens despite revenue growth in first half
Indosat booked 6.92 percent year-on-year (yoy) increase in its overall revenue to Rp 27.93 trillion last year, in line with the resilience seen in the telco sector as the COVID-19 pandemic forced people to move their work and learning activities to digital platforms.
Company shares, traded at the Indonesia Stock Exchange (IDX) under the ticker ISAT, dipped 0.4 percent on Thursday afternoon compared to the benchmark Jakarta Composite Index’s drop of 0.23 percent.
