Indonesian number two XL Axiata is selling off a portion of its telecoms towers to dedicated tower firm Solusi Tunas.
Around 3500 have been sold for IDR5.6 trillion ($460 million) in cash, with the deal set to close before the end of the year. XL Axiata, which is controlled by the Malaysian Axiata Group, will then lease the towers back from Solusi Tunas for the next 10 years.
“The sale unlocks the value of a part of our tower portfolio at an attractive valuation and on competitive terms. XL will be using the transaction proceeds to partially deleverage,” said XL Axiata’s chief executive Hasnul Suhaimi.
Agreed after a three month tender, the deal is aimed at lowering XL Axiata’s debt. Once the sale is complete, XL Axiata will retain 6500 towers. It is not yet clear whether the operator will sell more towers to other firms.
Asset sales are becoming increasingly common in Indonesia as a means of covering increasing costs and reducing debt. In 2012, third-placed operator Indosat sold 2500 towers to Tower Bersama Infrastructure for $406 million.
However, Telkom Indonesia – parent company of market leader Telkomsel – has bucked the trend by declaring its goal of becoming the country’s largest tower operator within the next three to five years.
To this end, the group may acquire Bersama - a potential deal made all the more likely after Indosat sold its 5% stake in the tower firm.