PT Indosat Ooredoo Tbk (IDX: ISAT) prepared funds Rp2 trillion (US$139.86 million) to develop 4G network in the second half of 2019 - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesian telecommunication provider, PT Indosat Ooredoo Tbk (IDX: ISAT) prepared funds Rp2 trillion (US$139.86 million) to develop 4G network in the second half of 2019, said the senior official. To date, around 81 percent of Indonesian society has been connected with Indosat’ 4G.

In an official statement released on Tuesday (08/06) President Director of Indosat Ahmad Abdulaziz Al-Neama said to accomplish the goal, the operator set a target to build 18,000 base transceiver stations (BTS) in 4,200 sites around and outside Java Island.

Through this action, the company hopes to own 40,000 BTS by the end of 2019. The investment, he said, is part of this year’ capital expenditure with total amount Rp10 trillion. Until the first half of 2019, the company has used Rp5.4 trillion of the total capital expenditure.

Al-Neama explained, the company will conduct rights issue, sell bond and towers to finance the capital expenditure. Last July, Indosat has received fund of Rp3.38 trillion from bond sale.

Indosat planned to sell 3,000 towers with targeting funds $300 million. The operator is working with New York-based JP Morgan Chase & Co as an adviser for the sale and has already been contacted by potential local and overseas buyers, media reported.

Regardless of the ambitious plan, in the first half (1H) of 2019, the company still booked loss of Rp331.9 billion from 1H of 2018 loss Rp693.7 billion. The loss was contributed by higher operating expenses Rp11.49 trillion, up by 16.8 percent from 1H of 2018 at Rp10.53 trillion.

While, the revenues increased by 11.1 percent to Rp12.29 trillion caused by the increasing of cellular services of Rp9.96 trillion.

Indosat has over 97 million subscribers across Indonesia and Southeast Asia, making it the country’ third-biggest mobile network operator by subscribers. The company also offers fixed-line broadband services to its customers.

In February 2012, the operator sold 2,500 towers to PT Tower Bersama Infrastructure Tbk (IDX: TBIG) for $519 million and then leased back capacity from the company, which is one of two major independent tower operators in Indonesia. The company is currently renting back 2,500 towers for a 10-year period with a monthly rental price of $1,300 per tower slot.

Indosat was hit hard by a government SIM registration push started in May 2018, with its mobile connections dropping from nearly 110 million in Q4 2017 to 57.5 million in the last quarter of 2018, data from GSMA Intelligence showed. It’s market share dropped from 23 percent to 18 percent over that period.

On March, the international rating agency, Moody’s Investors Service has revised the outlook on company’ ratings to negative from stable. At the same time, Moody’s has affirmed the company’s Baa3 issuer rating.

The negative outlook reflects a weakening in Indosat’ financial metrics driven by the company’ plans for accelerated 4G’ investment amid an intensely competitive operating environment for the Indonesian mobile sector, says Nidhi Dhruv, a Moody’s Vice President, and Senior Analyst.

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Written by Staff editor, Email: theinsiderstories@gmail.com