The shares of PT Tower Bersama Infrastructure Tbk (IDX: TBIG) traded with worth of Rp536.53 billion (US$38.05 million) on Thursday, (10/17) - Photo: Special

JAKARTA (TheInsiderStories) – Indonesia’s telecommunication tower operator PT Sarana Menara Nusantara Tbk (IDX: TOWR) announced the completion of the acquisition of PT Komet Infra Nusantara (KIN) from PT Nusantara Infrastructure Tbk (IDX: META), citing the information disclosure on the Indonesia Stock Exchange.

“We are pleased to announced that the 100 percent purchase of KIN shares has been completed and we look forward to a smooth transition by initiating a combination and rationalization of operations,” said Aming Santoso, President Director of TOWR in the announcement released on Monday (04/06).

PT Profesional Telekomunikasi Indonesia (Protelindo), a company owned by Djarum Group, will take over tower the assets following the shares sale. The company plans to combine some of the operations and support functions of KIN with Protelindo during this year to realize the operational synergy between the subsidiary with IForte and KIN.

Based on the sale and purchase agreement signed on March 23, META’s unit PT Telekom Infranusantara sold its 1.31 billion shares in KIN around Rp 1.40 trillion (US$100.71 million) of which was taken from internal cash generated from operations.

As part of Protelindo, KIN will soon benefit from lower debt costs due to Protelindo’s investment grade rating.

Through this acquisition, Sarana Menara gets additional 1,400 towers spread across North Sumatra, Riau, Batam, most of Java and Bali. In addition, KIN also operates fiber optic cable network especially in Surabaya, Batam and Medan.

This year, KIN’s sales is estimated to reach Rp325 billion with approximately 70 percent of revenues coming from PT Telkom Selular (Telkomsel), PT XL Axiata Tbk (IDX: EXCL) and PT Indosat Ooreedo Tbk (IDX: ISAT).

After the completion of the acquisition, the operator has actually established its position as the largest telecommunications tower provider in Indonesia. In total, when coupled with KIN assets, TOWR has more than 16,400 towers, over 27,000 tenancies and over 5,300 km of fiber optic cables.

Protelindo owns and operates over 14,500 towers in Indonesia. Its unit was established in January 2003 and has become the largest independent owner and operator of towers for wireless operators in Indonesia.

Protelindo’s primary business is leasing space at its multi-tenant tower for all major wireless operators in Indonesia under long-term lease agreements.

Ratings said average net leverage for the telecom sector in Indonesia is likely to stabilize at around 1.7x in 2018. This follows periods of deleveraging in 2015-2017 by second-largest telecom operator Indosat (BBB+/Stable) and third largest XL Axiata (BBB/Stable) to reduce their forex debt exposure.

Telecom industry EBITDA will grow at mid-single-digit rates, underpinning the continuing rational competition in the Java region and gradual data monetization.

Industry Capex is likely to be higher in 2018 and 2019, as telecom operators invest to meet rising demand for LTE services. Incremental Capex comes on the heels of Indosat’s and XL’s plans to expand their network coverage outside Java.

Meanwhile, there will be a strong fixed segment momentum for cable and fibre broadband services, propelled by a broadband network target of achieving 71 percent of urban households at 20Mbps by 2019, from around 10 percent.

The average capital expenditure or revenue ratio for the three major telecom operators will remain high at around 26 percent in 2018. XL and Indosat are each gradually rolling out their networks outside Java, following delays in their network-sharing collaboration.

XL’s and Indosat’s plans to expand their footprint outside Java areas should also lead to stronger tower additions. TBI and Protelindo will benefit from any accelerate capital expenditure expansion by their respective largest tower tenants – Telkomsel and PT Hutchinson 3 Indonesia, given the telecom operators’ recent spectrum wins.

TOWR itself has purchase 1.35 billion shares or representing 13.32 percent of the total issued and paid up shares in the company from the shareholders in 2017. The 12 shareholders raised funds Rp5.40 trillion from the share sale. The indicative price Rp 4,000 to Rp 4,500 a share.

The parties involved in the transaction namely 28th Street Ventures, LLC 3.70 percent, FC Managers Asia Ltd. Co., 1.54 percent, Suma Investments Ltd. Co., 1.47 percent, Tiger Global Investment, L.P. 4.32 percent, Tybourne Equity Master Fund 0.85 percent, Tyboune Long Opportunities Master Fund 0.60 percent, Blackwell Partners LLC- Series A 0.06 percent, Murillo Uchoas Dos Santos Penchel 0.31 percent, Blake Rosen 0.18 percent, Deemer A. Dana 0.11 percent, William McCarrol 0.06 percent and Lydia Sumardi 0.03 percent.

In addition, PT Sapta Adhikari Investama (holding company of Djarum Group) as a principal shareholder of the company and the selling shareholders, subject to certain exceptions–including for up to 10 percent of the company’s shares for merger and acquisition transactions to lock-up for a period of six months .

US$1: Rp13,900