Indonesia’s tower operator Protelindo secures $25.36m loan from DBS

PT Profesional Telekomunikasi Indonesia (Protelindo), subsidiary of tower operator PT Sarana Menara Nusantara Tbk (TOWR), controlled by the Djarum Group, and iForte Solusi Infotek – a leading micro-cell tower provider- has signed one-year, revolving loan facility agreement worth Rp350 billion ($25.36 million) with PT Bank DBS Indonesia.

Sarana Menara’s Corporate Secretary Arif Pradana, said in a statement, that the loan interest rate is based on JIBOR plus 2.15 per cent per annum. The loan will be used to refinance part of iForte’s debt. The facility agreement was signed on August 11.

On May 13, Protelindo signed an agreement to acquire 100 per cent of iForte shares from the Saratoga Group. At the time, Protelindo also entered into an Assignment Agreement in relation to all outstanding bonds and warrants issued by iForte.

Macquarie Capital acted as the financial advisor to Protelindo and Credit Suisse acted as the financial advisor to iForte, on the deal.

The acquisition of iForte by Protelindo is to be added to business portfolios of Sarana Menara, which currently has 11,675 towers with 20,325 tenants as of March 2015.

As part of the transaction, Protelindo announced that Peter Djatmiko, the founder and CEO of iForte, will maintain his position as President Director of iForte. The decision is also part of long-term partnership of the two companies.

Pursuant to this partnership, Djatmiko will have the option to swap up to 25 per cent of equity interest in iForte into shares in Protelindo, on completion of the the transaction.

iForte manages over 450 micro-cell towers and 7 based transmission services (BTS) hotels in operation. It also owns and operates over 700 kilometres of fiber optic network with over 180 Points-of-Presence in metropolitan Jakarta and Surabaya.

iForte utilizes its fiber optic network along Busway Corridors in Jakarta to offer 3G WiFi-offload services. In addition, it provides Very Small Aperture Terminal satellite services across Indonesia.

Protelindo believes the transaction will further strengthen its market position as the largest independent owner and operator of telecommunication towers in Indonesia. With over 11,600 towers and more than 20,000 tenants, Protelindo covers the entire Indonesian archipelago.

Sarana Menara aims to pocket between 5 and 12 per cent revenue growth this year, compared to around 28 per cent last year.

Industry Overview

Overall domestic tower industry may face a headwind this year, with rupiah depreciation putting pressure on the industry as most tower materials are sourced from overseas. Besides Sarana Menara, other tower companies have also expanded their businesses into fiber-optic networks and/or microcells.

PT Solusi Tunas Pratama Tbk (SUPR) has installed its fiber-optic network in big cities, such as Jakarta, Surabaya, Medan, Bandung and Bogor have been previously targeted to make it 2,400 km long by end of last year.

The firm has allocated a Rp1.5 trillion loan facility to its subsidiary, PT BIT Teknologi Nusantara, to develop its microcell and fiber-optic business.

Another tower company, PT Tower Bersama Infrastructure Tbk (TBIG), has also rolled out its fiber-optic network in the Greater Jakarta area, connecting its telecommunications towers.

Indonesia’s digital universe (the amount of data traffic) is forecast to grow by more than six times, from 84 exabytes last year to 656 exabytes by 2020.

This will also benefit tower businesses as the country will need more telecommunication towers to improve and provide ICT services in remote areas across the archipelago.