Axiata Jakarta XL Axis Capital Group Telekom Indonesia - Axiata unit to sell 3,500 towers to Solusi Tunas in RM1.5bil deal

Axis Capital Group

PETALING JAYA: Axiata Group Bhd’s Indonesian unit, PT XL Axiata Tbk, has picked PT Solusi Tunas Pratama Tbk (STP) over 14 others to sell a portion of its towers in a deal worth US$460mil (RM1.5bil), or 5.6 trillion rupiah, cash.

XL Axiata is selling 3,500 of its 8,000 towers in a deal signed yesterday. There are no immediate plans to sell more towers, however.

“We have not taken any decision with regard to the remaining towers,” XL Axiata vice-president of corporate communications Turina Farouk said from Jakarta in replies to queries from StarBiz.

Earlier, XL Axiata had been contemplating a flotation exercise of its tower business, but later opted to sell a portion of the towers to raise cash to pare down debts that had increased after it bought PT Axis Telekom Indonesia in March for US$865mil (RM2.82bil).

Sources said that of the 15 interested bidders for the towers, only STP was prepared to see through the process.

The others were not comfortable with the terms of the bidding process.

“All the main players were not comfortable with the terms of the bid ... some may question why the bid was not aborted since there was only one serious bidder,” said an industry player.

Turina said they had a process where the bidders had been short-listed from more than 15.

“The process was designed to enable only serious bidders to conduct detailed due diligence and put in the bids. We cannot comment on the process details, as there are confidentiality clauses,” she said, adding that “STP was the highest bidder”.

She, however, declined to name the 15 bidders. Earlier reports said they included PT Tower Bersama Infrastructure Tbk, PT Sarana Menara Nusantara Tbk, PT Inti Bangun Sejahtera Tbk, PT Nusantara Infrastructure Tbk and PT Centratama Telekomunikasi Indonesia Tbk.

PT Nusantara is controlled by Indonesian billionaire Peter Sondakh, who is said to be keen on growing the tower business. He was the original owner of XL Axiata until he sold his stake to Axiata Group, which now has 66.5% in XL Axiata.

STP is the third-largest public-listed independent owner and operator of towers for wireless operators in Indonesia. It leases out space at its multi-tenant towers to all major wireless operators in Indonesia under long-term lease agreements.

XL Axiata chief executive officer Hasnul Suhaimi in a statement issued yesterday said the sale of the towers to STP was a positive step towards an asset-light strategy, thereby freeing up additional resources to enhance the focus on the company’s core business and ensuring a superior customer experience.

“The sale unlocks the value of a part of our tower portfolio at an attractive valuation and on competitive terms. XL Axiata will be using the transaction proceeds to partially deleverage,’’ Hasnul said.

XL Axiata has also hammered out a 10-year contract to lease back the towers it has sold to STP.

The company said it had secured competitive terms as the anchor tenant of the towers, and expects to benefit from ongoing capital expenditure and operational expenditure savings.

With PT Axis, XL Axiata has moved one notch up from third place to become the second-largest mobile player in Indonesia. It now has 62.9 million subscribers in a market where penetration rates have reached 122% with a total of 278 million users. Indonesia is the fourth-largest mobile market in the world.

There are 60,000 towers in Indonesia, of which 60% is said to be owned by telecom companies, with the rest by independent companies.

Indonesia is the second-largest tower market in Asia after India, and both PT Tower Bersama and Protelindo have over 9,000 towers each in the country.

Axiata Group’s share price rose one sen to close at RM7.01 yesterday.

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