Indonesia’s Indosat Ooredoo in talks to sell telco towers for over $300m

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Indonesia-based telecom company Indosat Ooredoo has initiated talks to sell 3,000 telecom towers 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 upwards of $300 million, said one of the sources, 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 yet 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 meet a planned capital expenditure of $2 billion over the next three years. The company had then explored options including issuing corporate bonds or rights, raising additional capital from its shareholders, or selling the 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 Q1 2019, Indosat Ooredoo booked an IDR 6.05 trillion in operating revenue and IDR 2.07 trillion of EBITDA. The company noted an IDR 14.4 trillion of market-cap.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.