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Jakarta Post

XL Axiata sales towers to improve efficiency, reduce costs

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Thu, February 13, 2020   /   01:50 pm
 XL Axiata sales towers to improve efficiency, reduce costs A technician inspects a telecommunication tower in Menteng, Central Jakarta. Telecommunication firm PT XL Axiata signed an agreement in Jakarta on Feb.7 to sell its 2,782 telecommunication towers to two local companies. (JP/Dhoni Setiawan)

After months of negotiations,  telecommunication firm XL Axiata has agreed to sell its 2,782 telecommunication towers to two local companies and plans to use the proceeds to expand its 4G coverage, as well as to improve its mobile data network quality.

XL Axiata finance director M. Adlan bin Ahmad Tajudin said in Jakarta on Wednesday that 1,728 towers had been sold to PT Profesional Telekomunikasi Indonesia (Protelindo) and 1,054 towers to PT Centratama Telekomunikasi Indonesia.

The agreement on the sale of the towers was signed in Jakarta on Feb. 7.  “We will raise Rp 4.05 trillion (US$ 296.55 million) from the sales and expect to close the deal by the end of the first quarter,” he said during a press briefing event in Jakarta.

Following the sales, Adlan said the company would continue to use the towers by leasing it back from the buyers for 10 years. Such a move would help the company save and increase its efficiency significantly in the long run.

By selling the towers, the publicly listed company could also reduce its operational costs and the risks that might come from the towers.

“This way, we don’t have to spend money on the towers’ maintenance, land lease, licensing and pay compensation to the communities around them,” he explained, adding that with the sales of the towers, the company could focus on the telecommunication service.

Adlan said the company planned to use proceeds from the towers’ sales to support this year’s capital expenditure and working capital.

A similar move was also made by publicly listed telecommunication provider Indosat last October, during which it sold 3,100 telecommunication towers for Rp 6.39 trillion to PT Dayamitra Telekomunikasi (Mitratel) and Protelindo.

Indosat’s chief executive officer, Ahmad al-Neama, said the sales would allow the company to accelerate the implementation of its strategy and continue to ensure the best experience for its customers.

Meanwhile, XL Axiata’s president director Dian Siswarini said the company had allocated Rp 7.5 trillion in capex this year. Around 80 percent of the allocation will be used to expand its telecommunication network, specifically its 4G network, so that 95 percent of the population could be covered by the service.

She said the company would focus on expanding to certain cities and regencies, especially outside of Java, that had good business prospects.

“The expansion will be carried out to cities and regencies that can give a return on investment in three to four years,” said Dian. 

The company’s group head of technology strategy and architecture, I Gede Darmayusa, said it would also expand its fiber optic network in the country’s main cities to increase mobile data capacity.

This year, the company planned to expand its fiber optic network to 100 cities both in Java and outside of the island, he said. The expansion would increase its fiber optic network coverage to 70 percent, covering 300 cities. 

“This will help us encourage digital connectivity among our customers,” he said.

Dian also said the company planned to use artificial intelligence and machine learning to personalize mobile data packages. The strategy was expected improve service and increase  sales.

“Hopefully with such a strategy , our financial performance will be better than the overall industry,” she

The company booked a 15 percent year-on-year (yoy) increase in revenue to Rp 25.15 trillion in 2019 and a 17 percent yoy increase in earnings before interest, tax, depreciation and amortization to Rp 9.97 trillion.