Indosat Ooredoo’s 200,000 telecom towers of $100,000 each
Indosat Ooredoo, an Indonesia-based telecom company is in talking terms to sell 3000 telecom tower assets. JP Morgan is currently working with Indosat Ooredoo as sell-side advisor on the process. It is estimated that the total valuation of the transaction to be around $300 million. There are over 200,000 towers and each of the towers is estimated to be around $100,000 each. Moreover, the actual estimation may vary depending upon the location, tenancy and few other factors which might later on affect the valuation.
As the news has already gone out, there are many potential buyers who are interested in the transactions are coming forward from both foreign as well as within the country. However, the process is still under discussion as the transaction is very huge; there are many bidders who seem to be interested and once the bidders are selected they will be then shortlisted for second around for negotiations.
There were few attempts made to contact the respective parties to understand the development in the transactions. Turina Farouk, SVP, Head of corporate communications at Indosat Ooredoo, refused to say anything on the matter. On the other, JP Morgan refused to comment on the transaction.
The company will raise $2 billion of external funds to fulfil its capital expenditure
There were media reports which stated that in the span of three years, Indosat Ooredoo needs to raise $2 billion of external funds to fulfil its capital expenditure. Chris Kanter, CEO of Indosat Ooredoo indicated that, “they have listed few options to raise funds from external sources such as raising additional capital from its shareholders, issuing corporate bonds or rights or adhering to the sale of telecom towers.
According to the media reports, Indosat Ooredoo will need IDR 10 trillion ($706.75 million) of capital expenditure in 2019, which will be used to add a total of 18,000 4G base-transceiver station (BTS). After the sale process is completed, the company is expected to conduct a sale-leaseback transaction-as generally practiced in the industry. This move will help the company reduce their cost in maintaining telecom towers.
As per the latest annual reports, a monthly rental price of $1,300 per tower slot is valued.
As per the Indosat Ooredoo’s 2018 annual report, the company is renting back some spaces from the total of 2,500 telecom towers for 10 years period. The monthly rental price according to reports is $1,300 per tower slot. Indosat Ooredoo booked an IDR 6.05 trillion of operating revenue and IDR 2.07 trillion of EBITDA in 1Q-2019. Further, the company also noted an IDR 14.4 trillion of market-cap.
