Telkom Indonesia, the parent company of Indonesian mobile market leader Telkomsel, is planning to acquire a stake in a listed tower company in order to realise its ambition of becoming the country’s leading tower operator.
While it has not confirmed its target, Indonesia’s two leading tower companies are Nusantara Infrastructure and Tower Bersama Infrastructure. The latter company’s rating outlook was recently downgraded by Moody’s from stable to negative; Indosat sold its 5% stake in Bersama in March and the firm has thus far not revealed a recapitalisation plan.
Bersama’s growth strategy has been based on acquisitions, and it is likely to pursue this. Several Indoensian operators are likely to sell their tower assets over the next few years, then lease them back from the private tower firms through long-term contracts.
Moody’s analyst Nidhi Dhruv noted: “Additional acquisitions would make Bersama the largest independent tower operator in Indonesia — but a substantially debt-funded acquisition would further strain the company’s credit profile and lead to a ratings downgrade.”
Telkom Indonesia aims to acquire a majority stake in a tower firm via a share swap as early as Q1 2015. The operator’s finance director Honesti Basyir has stated that the initial phase of the acquisition will require it to raise INR5-10 trillion ($427-854 million) through loans or a bond issue.
Basyir added that 40% of required CAPEX – the full amount of which is still being determined – would be funded externally. Telkom’s typical CAPEX is around INR20-25 trillion, or which 65-70% is spent on Telkomsel.
The operator’s enthusiasm for its tower operation is a turnaround from 2013, when it was considering divesting a stake of up to 49% in its tower business Dayamitra Telkom - better known as Mitratel – to focus on its core units. Its new plans for the unit echo its goal in early 2013 of merging its tower unit with a publicly listed tower company.
Mitratel currently has around 3000 towers, while Bersama has 11,266.
