Indosat Ready To Sell 4,000 Towers In The Middle Of A Pandemic, Want To Repeat Money In 2019?

Photo: Doc. Indosat Ooredoo

JAKARTA - Telecommunications issuer PT Indosat Tbk (ISAT) is exploring the sale of 4,000 units of the company's towers amid a crisis due to the pandemic. The goal is to be able to improve the company's performance in 2021. Tower sales are not the first time this has been done, even since 2019.

Chief Legal & Regulatory Officer who is also Acting Corporate Secretary of Indosat Natasha Nababan said that the company's management is still in the early stages of exploring the transaction.

"However, if a transaction occurs, it can become a material transaction under the applicable OJK (The Financial Services Authority) regulations", she said as quoted from the disclosure of information to the Indonesia Stock Exchange, Monday, February 22.

However, the tower sales plan this time did not mention who the prospective buyers were in the transaction or the projected value of the transaction.

In 2019, Indosat Ooredoo sold 3,100 of its towers to PT Dayamitra Telekomunikasi (Mitratel) and PT Protelindo. It was recorded that 2,100 towers were released to Mitratel, a subsidiary of PT Telkom Indonesia Tbk (TLKM). Meanwhile, the 1,000 towers were released to Protelindo, a subsidiary of PT Sarana Menara Nusantara Tbk (TOWR), and the sale of 3,100 towers at that time resulted in a transaction value of IDR 6.39 trillion.

Although the management said that they plan to sell the tower is still in the early stages of exploring the transaction, reports that the ISAT-coded issuer will sell around 4,000 towers have already circulated.

BTS tower illustration. (Photo: Doc. Antara)

At that time, the Director of the Indonesia ICT Institute Heru Sutadi predicted that the plan would get a positive response from the market.

"If Indosat continues to monetize its towers like in 2019, the market will respond positively even though it is currently still in a pandemic condition. In fact, the price per tower is also expected to be higher than before", he explained in his study as reported by Antara, Tuesday, February 9.

Heru said the auction plan received a response from a number of big players in the tower sector such as PT Sarana Menara Nusantara Tbk (TOWR) through Protelindo, PT Dayamitra Telekomunikasi (Mitratel) which is a subsidiary of PT Telkom Indonesia (Persero) Tbk., PT Tower Bersama Infrastructure. Tbk. (TBIG), and PT Centratama Telekomunikasi (CENT).

Tower sales become capital towards 5G

Heru said the selling price of these towers could increase significantly because the assets being sold are of good quality. According to him, this could be the company's capital to improve performance in 2021.

"This will be additional capital for Indosat to move towards the 5G era because it is more agile and competitive", he said.

Moreover, Heru said, currently, all cellular operators are competing to implement 5G services which then spur demand for data services, so that the demand for telecommunications towers also continues to grow.

The sale of towers will benefit Indosat

CSA Research Institute Senior Analyst Reza Priyambada said if the tower sales scheme this time is the same as the one carried out in 2019, namely after being sold and then leased back, it will be profitable for Indosat.

"If the scheme is still the same, it could be because for funding purposes and the rental option is cheaper than if it is owned by yourself because there are maintenance costs", he explained.

Previously, ISAT claimed that the telecommunications network infrastructure built so far is ready to support the deployment of 5G.

Meanwhile, the Director & COO of Indosat Vikram Sinha said that 5G is a very important investment in the telecommunications industry. During the last 6 quarters, the company has ramped up its network deployment. Including fiber optics, so that the services provided are more excellent while preparing to welcome 5G.

Director & COO Indosat Vikram Sinha. (Photo: Doc. Indosat Ooredoo)

"We are also working closely and closely with regulations and preparing the infrastructure provided. We have a very high focus on preparing the 5G network", he explained in an online press conference, Tuesday, January 12.

Furthermore, Vikram said the benefits of investing in 5G will be felt even more when the ecosystem is ready. The company will also continue to communicate with relevant regulators to see a road map for 5G frequencies in Indonesia.

Referring to ISAT's incidental public exposure data in January 2021, the company has 60,000 4G Base Transceiver Station (BTS) as of the third quarter of 2020. This number is more than 2 times the position in the same period the previous year, which only reached 29,300 towers.

Meanwhile, the number of customers was 60.4 million consumers as of September 2020, or 2.8 percent higher than the same period the previous year, which amounted to 58.8 million.