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.
