Even as the exact amount of shares for sale could not be ascertained, people familiar with the matter say shareholders may seek a full exit option if talks fructify.
Sinar Mas Group holds 8.5% stake in IBS through its listed subsidiary Dian Swastatika Sentosa. Meanwhile, local company Bakti Taruna Sejati holds a majority of 61.88% in the company.
When contacted, Dian Swastatika’s corporate secretary Susan Chandra told DealStreetAsia that the company has no plans to conduct a corporate action at this moment and will announce any material information on the stock exchange. Bakti Taruna Sejati, however, could not be reached for comment.
Sources privy to the development said IBS has been eyeing a divestment process for a while and has hired Credit Suisse to facilitate the transaction. However, Credit Suisse’s spokesperson declined to comment on the development.
Industry experts say IBS’stake sale process may be quite challenging since the company’s revenue primarily rides on tower rental fees from the Sinar Mas’ telecom operator company Smartfren Telecom.
Throughout 2018, Smartfren contributed 72.73 per cent of IBS tower rental income, according to a local media report in May 2019. However, Smartfren is among the smallest telecom operator in Indonesia, a source said.
By the end of last year, IBS owned and operated a total of 5,059 telecom towers and 6,144 kilometers of fiber-optic network, according to its annual report. The company plans to build around 600 to 800 new towers in 2019 and estimates as much as IDR 1 trillion ($71.68 million) capital expenditure from its own profit as well as a bank loan, according to media reports.
IBS’ towers are mostly located in Sumatera and Java Islands, but it also has a presence in Kalimantan and Sulawesi Islands.
Some of IBS’ towers located in distinctive areas that are not reachable by other telecom towers operators give them an edge over others. This proposition could help evince investor interest.
Indonesia may expect telecom operator consolidation in next few years, which is encouraging tower companies to find new shareholders. Besides, the slowdown in the telecom industry has also encouraged a shorter lease contract for tower assets from 10 years to five years previously.
Lat year, talks had surfaced in the market pertaining to a proposed merger between Indosat Ooredoo and XL Axiata. However, the deal has not gone through yet.
Besides IBS, other Indonesia’s telecom towers which are currently on the block include Centratama Telekomunikasi, Solusi Tunas Pratama and Indosat Ooredoo.