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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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Technicians of Indonesian telecommunications company Indosat inspect an antenna tower in Central Jakarta on September 13, 2011. The Cellular Telecommunications Association of Indonesia projects a 6 to 7 percent industry growth this year, lower than last year's growth of around 10 percent, according to media reports. (AFP/Bay Ismoyo)
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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.
