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View all search resultsMajor telecommunication tower operator Tower Bersama Infrastructure (TBI), is preparing up to Rp 2 trillion (US$145
ajor telecommunication tower operator Tower Bersama Infrastructure (TBI), is preparing up to Rp 2 trillion (US$145.72 million) of capital expenditure (capex) this year to build new towers.
TBI president director Herman Setya Budi said on Friday that his company was looking to prepare the capex to help build between 1,500 and 2,000 towers before year-end.
With the new towers, Herman added that his company was looking to see around 2,000 new tenants this year.
'We believe that business will be good this year. With telco operators actively expanding into the 4G network, we hope that there will be a significant increase in demand for towers that follows the network expansion.' Herman said.
As of Sept. 30 2015, TBI had 19,643 tenants and 12,292 telecommunication sites comprising 11,291 telecommunication towers, according to the company's records.
The capex figure, Herman said, was yet to include funds prepared to acquire cell phone operator XL Axiata's towers or other prospective non-organic growth.
As previously reported, XL is offering around 2,500 towers in an open bidding to help the company cover some of its debts.
Herman said that his company had submitted a proposal to join the bidding process, adding that the company is currently engaged in a non-disclosure agreement with XL that restrict the company to provide details about its involvement, including how much it will offer for the towers.
'We are planning to acquire all the towers offered. However that is all that we can disclose for now because we are in an agreement,' he said.
XL Axiata finance director Mohamed Adlan bin Ahmad Tajudin previously said that the company expected to raise funds from selling its towers, citing the firm's previous tower auction.
XL sold 3,500 towers to publicly listed tower company Solusi Tunas Pratama though a bidding process back in 2014 generating Rp 5.6 trillion, meaning that each of the towers was sold for around Rp 1.6 billion. Taking a line from the previous transaction, interested bidders may need to prepare around Rp 4 trillion for the towers this time.
Herman said that his company would mostly rely on its internal funds to cover the costs of expansion requirements this year, adding that it will possibly resort to undrawn facility commitments if needed.
TBI saw its revenues increase by only around 4 percent to Rp 2.54 trillion during the first nine month of last year, while its net profits slipped by 30 percent to Rp 796.35 billion due to rising costs. Its equities stood at Rp 2.96 trillion as of September last year and its liabilities were Rp 21.35 trillion.
Last month, Moody's Investors Service announced that it had downgraded TBI's corporate family rating ' and the rating on the $300 million senior unsecured notes issued a wholly-owned subsidiary ' to Ba3 from Ba2, with a stable outlook.
Moody's argued that the rated company's leverage, which significantly increased following its debt-funded acquisition of 2,500 towers from operator Indosat Ooredoo in 2012, had persistently remained above the rating agency's tolerance for the rating since that time.
A shareholder returns policy ' which guided to dividends and/or share buybacks of Rp 1 trillion this year ' might also lead to TBI reporting lower retained cash flows and negative free cash flows over the next three years.
'Further downward pressure on the ratings could arise if the prevailing industry slowdown continues, the company faces challenges in renewing contracts or TBI makes significant debt-funded acquisitions, or materially increases shareholder payouts which lead to a deterioration in its financial metrics,' Moody's said in the statement.
Nonetheless, it said, the stable rating was supported by TBI's leading position in a business that has a high degree of revenue transparency and predictability, with high quality cashflow stream from the country's 'Big 4' telecommunications operators in its tenant base, accounting 83 percent of TBI's total revenue for January-September 2015. The company also faces no major debt maturities until 2018.
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