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UPDATE 1-Indonesia's XL Axiata sells telecom towers to Solusi Tunas for $460 mln
October 1, 2014 / 8:23 AM / 3 years ago

UPDATE 1-Indonesia's XL Axiata sells telecom towers to Solusi Tunas for $460 mln

(Adds comment from chief executive, industry context)

By Fransiska Nangoy and Eveline Danubrata

JAKARTA, Oct 1 (Reuters) - Indonesian mobile telecom operator PT XL Axiata Tbk will sell 3,500 communication towers to telecom infrastructure firm PT Solusi Tunas Pratama Tbk in a 5.6 trillion rupiah ($460 million) deal that will help it cut mounting debt.

After a three-month tender process, the country’s second-biggest telecom operator by subscribers agreed to sell the towers to Solusi Tunas for cash and then lease them back for 10 years, XL Axiata said in a statement. The deal is expected to close by the end of the year.

The sale comes as telecom operators in Indonesia seek to cover the cost of growth by selling or spinning off assets like communication towers, lowering capital expenditure and maintenance costs as well as reducing debt.

In 2012, PT Indosat Tbk, the country’s third-biggest telecom firm, sold 2,500 towers to PT Tower Bersama Infrastructure Tbk for $406 million upfront.

XL Axiata, 66.5 percent-owned by Malaysian telecom company Axiata Group Bhd, will be left with around 6,500 towers after the sale to Solusi Tunas. Tower Bersama had been interested in XL Axiata’s assets, its finance director told Reuters in July.

The firm may sell more towers to interested parties, including Solusi Tunas, but has not decided when, a person with knowledge of the matter said. The person declined to be identified because the information is not public.

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

At end-June, XL Axiata’s total debt had jumped 93 percent to 45.4 trillion rupiah ($3.73 billion) from the same period a year earlier.

The sale of the towers to Solusi Tunas was priced at nine times XL Axiata’s earnings before interests, taxes, depreciation and amortisation over the last 12 months, the person with knowledge of the matter said. Initially, 19 companies had expressed interest in the towers, he added.

Bank of America Merrill Lynch is the exclusive financial advisor to XL Axiata on the transaction, while Standard Chartered Bank and J.P. Morgan advised Solusi Tunas.

1 US dollar = 12,155.00 rupiah Reporting by Fransiska Nangoy and Eveline Danubrata in JAKARTA; Additional reporting by Trinna Leong in KUALA LUMPUR; Editing by Edwina Gibbs and Kenneth Maxwell

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