JAKARTA (TheInsiderStories) – Cellular provider, PT Indosat Ooredoo Tbk (IDX: ISAT) prepared capital expenditure up to Rp9.5 trillion (US$678.57 million) in 2020 to support the business, said the president director today (02/24). The company also targeting the the revenue growth rate of market growth, with EBITDA margin at 30 percent upper quadrant percentage.
“In line with our step for the future, we want to play a major role in building the digital ecosystem Indonesia, to deliver improved quality of service and experience for customers,” said president director and CEO, Ahmad Al-Neama, in a written statement released today.
Last year, the company prepared funds Rp2 trillion to develop fourth generation (4G) network. 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.
The investment, he said, is part of 2019’ capital expenditure with total amount Rp10 trillion. Al-Neama explained, the company has sell bond and towers to finance the capital expenditure. In July 2019, Indosat has received fund of Rp3.38 trillion from bond sale.
The operator was sell 3,000 towers to PT Dayamitra Telekomunikasi (Mitratel), unit of state-owned telecommunication provider, PT Telkom Indonesia Tbk (IDX: TLKM) and tower operator, PT Profesional Telekomunikasi Indonesia (Protelindo). The sales value of the tower reached Rp6.39 trillion.
Based on the official statements, Mitratel has signed a sales purchase agreement with Indosat on Oct. 14, as the winner of 2,100 towers with a value of Rp4.44 trillion. While unit Protelindo won the auction of 1,000 towers with a value of Rp1.95 trillion.
After the transaction have completed, Indosat, Mitratel and Protelindo will sign a master tower lease agreement. The new owners agreed to lease back the tower to Indosat.
The operator to lease 178 plots of land owned by Protelindo, and 369 plots of land owns by Mitratel. The tenancy period is also valid for 10 years. This transaction is done through a master land lease agreement.
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.
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 fourth quarter of 2017 to 57.5 million in the last quarter of 2018, data from GSMA Intelligence showed. Its 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.
Last year, Indosat’ revenue grew by 12.9 percent to Rp26.1 trillion supporting by mobile Revenue grew by 14.7 percent to Rp20.7 billion and EBITDA reached Rp9.9 trillion, or grew strongly by 51.6 in annual basis (YoY).
Mobile subscribers grew by 1.2 million subscribers to 59.3 million subscribers by the end of 2019, and Average Revenue per User increased to Rp27,900 from the previous year Rp18,700, primarily due to the high increase in traffic Data 71.6 percent YoY.
Unit of Qatar-based Ooreedo posted net income of Rp1.57 trillion, an increase of nearly 4 trillion compared to a net loss in 2018 due to the improvement in EBITDA and sales of the tower. In operational terms, Indosat has successfully conducted intensive deployment of 4G networks, develop 4G population coverage of only 44 percent at the end of 2017 to nearly 90 percent in 2019 and to improve the quality of connectivity across Indonesia significantly.
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