A worker servicing an Indosat tower. (Photo courtesy of Indosat)

Indosat May End Year in Black After Sale of Towers


OCTOBER 15, 2019

Jakarta. Indosat, the third-largest mobile phone operator in Indonesia, stands to gain $106 million in profit this year following the divestment of 3,100 telecommunication towers to a local rival, securities company Indo Premier Sekuritas said in a research note to clients on Tuesday. 

Indosat has signed off on a tower sale and leaseback agreements with Profesional Telekomunikasi Indonesia (Protelindo), the operating unit of telecommunication tower operator Sarana Menara Nusantara, and Dayamitra Telekomunikasi, the subsidiary of Indonesia's largest telecommunication firm, Telekomunikasi Indonesia. 

"We see ISAT will get a one-off gain from the sale," Indo Premier said, referring to the company by its ticker code at the Indonesia Stock Exchange (IDX).

The company's shares closed 7.2 percent higher at the exchange on Tuesday, extending a four-day rally. 

Indo Premier said Indosat sold 2,500 towers to Tower Bersama Infrastructure in 2012 and gained Rp 5 trillion ($353 million) from the sale. 

"Assuming the same price, bookkeeping method and cost, we see that ISAT can record a profit of Rp 1.5 trillion in 2019 from the sale of 3,100 towers," Indo Premier said.

Indosat booked a net loss of Rp 322 billion in the first six months of this year, narrowing from Rp 436 billion in the same period last year.

Indosat has called for an extraordinary shareholders meeting on Nov. 21 to secure approval for the sale.

The company said in a statement on Tuesday it expects to receive up to Rp 6.4 trillion in proceeds. 

Sarana Menara's Gain

Adam Ghifari, the vice president director of Sarana Menara, said the company will stand to gain an additional Rp 2 trillion in annual revenue after acquiring the Indosat towers. 

The acquisition is expected to be completed before the end of 2019.

Sarana Menara, part of the Indonesian cigarette conglomerate Djarum Group, currently owns and operates 20,000 towers through Protelindo for more than 32,000 tenants.

More than 50 percent of the company's towers are located in Java, Sulawesi and Kalimantan. 

The company's clients include Indosat Ooredoo, Telkomsel, H3i and XL Axiata.

Adam said the acquisition will bring more than 1,900 new tenants to Protelindo.

Sarana Menara will set aside Rp 1.95 trillion from its internal cash and bank loans to finance the tower acquisition, Adam said.

Protelindo secured a loan of Rp 3.5 trillion for the acquisition from Bank Mandiri last month. 

Sarana Menara's shares closed unchanged at the IDX on Tuesday.