Indonesia-based telecom company Indosat Ooredoo has initiated talks to sell 3,000 telecom tower assets, people familiar with the development told DealStreetAsia.
Indosat Ooredoo is working with JP Morgan as the sell-side advisor on the process.
The total valuation of the transaction is expected to be in upwards of $300 million, said one of the sources mentioned above – a figure that has been arrived at by taking into consideration the average value of around $100,000-200,000 for each tower. However, the estimate for each tower will vary depending on its location and tenancy, amongst other aspects.
It is understood that the company has already started receiving interests from some potential buyers, both foreign and local. However, the shortlisted bidders are still unknown as the process has not entered the second round of negotiations.
When contacted, Turina Farouk, SVP, Head of Corporate Communications at Indosat Ooredoo, declined to comment on the development. However, she added that the company has “some options to maximize its business value in the long term.”
An email sent to JP Morgan, on the other hand, did not elicit any response.
In May 2019, Indosat Ooredoo had reportedly underlined a slew of options to raise external funds to fulfill a total of $2 billion in capital expenditure over the next three years, cited a media report. The company had then highlighted certain options such as issuing corporate bonds or rights, raising additional capital from its shareholders, or adhering to the sale of telecom towers, its CEO Chris Kanter had reportedly indicated.
In 2019 alone, Indosat Ooredoo will need IDR 10 trillion ($706.75 million) of capital expenditure, which will mainly be used to add a total of 18,000 4G base-transceiver station (BTS), the media report had further added.
If talks fructify, Indosat Ooredoo is expected to conduct a sale-leaseback transaction for its telecom towers after the sale process completed – as is the practice in the industry. The move will help the company reduce its cost in maintaining telecom towers on its own, said sources.
Earlier, in February 2012, Indosat Ooredoo had sold as many as 2,500 telecom towers to local company Tower Bersama Infrastructure and its subsidiary-Solusi Menara Indonesia. The deal valuation then was reportedly pegged at around IDR 4.76 trillion or $519 million.
The company currently is renting back some spaces from the total of 2,500 telecom towers for 10 years period. The monthly rental price is at $1,300 per tower slot, as explained in Indosat Ooredoo’s 2018 annual report.
In 1Q-2019, Indosat Ooredoo booked an IDR 6.05 trillion of operating revenue and IDR 2.07 trillion of EBITDA. The company noted an IDR 14.4 trillion of market-cap.―Nikkei Asian Review