Friday, December 9, 2022

Telkomsel to sell 4,000 telecom towers to Mitratel for $434 million

Singapore operator Singtel has announced that its joint venture company Telkomsel has agreed to sell 4,000 telecommunication towers to Mitratel for $434 million.

As part of the transaction, Telkomsel has also entered into a 10 year lease arrangement with Mitratel for rental of tower space, which will take effect from the transfer of the respective towers to Mitratel.

By transferring these towers to Mitratel, the leading company engaged in the telecommunication infrastructure owns more than 28.000 telecommunication towers across Indonesia including urban, sub urban, and rural areas, according to a statement on Telkomsel website.

Mitratel also welcomes further transactions with any party as long as the transaction would benefit both parties and bring value creation for stakeholders.

This partnership is also expected could continue the momentum for both companies as they strengthen the asset management and business units that could drive increase business performance to be more ideal, productive, effective, and efficient. Eventually, Telkomsel and Mitratel will continue to strengthen their added values across their product and service innovations.

Notably, in the Telkomsel joint venture, Telkom Indonesia has a 65 percent ownership interest, while Singtel owns the remaining 35 percent of the company. Whereas, the buyer, Mitratel is wholly-owned by Telkom Indonesia, functioning as its infrastructure unit.

Advantages of towers

As such, the monetization of Telkomsel’s towers allows the wireless carrier to improve its capital structure, by repaying debt. Additionally, Telkomsel is focusing on its core business of providing wireless connectivity services to its customers in Indonesia.

Alternatively, for Mitratel, the addition of 4.0k telecommunications towers to its existing 24.0k tower portfolio in Indonesia, enhances its market position. Indeed, pro forma for today’s announcement, Mitratel owns 28.0k+ telecommunications towers across Indonesia in urban, suburban, and rural areas.

Overall, Mitratel’s acquisition of 4.0k telecommunications towers, provides the company with more infrastructure on which to add tenants. Particularly, this will be important for Mitratel’s tower business as 5G is rolled-out in Indonesia.

Consistency and seriousness

”This corporate action is an initiative from Telkom to reorganize our portfolio for optimum value creation of both companies, TelkomGroup, and its stakeholders,” Telkom Director of Strategic Portfolio, Budi Setyawan Wijaya says.

“For Telkomsel, this reflects the consistency and seriousness in supporting the portfolio transformation across digital business. Meanwhile for Mitratel, the action would strengthen the portfolio of telecommunication towers belong to TelkomGroup and make Mitratel’s steps become steadier as the leading independent tower player in Indonesia that support diverse needs for TelkomGroup and other tenants. Therefore, Mitratel is ready to optimize its value creation further through bigger corporate action,” he added.

Mitratel CEO, Theodorus Ardi Hartoko, adds, “Mitratel is committed to always explore new potentials that could strengthen the foundation of the company, this corporate action certainly could strengthen Mitratel’s position as a business consolidator in the telecommunication tower business in the market. The transaction also confirms Mitratel as the leading tower provider in Indonesia and would open more opportunities for potential tenants to utilize Mitratel services especially in the era of 5G in Indonesia.”