XL Axiata eyes RM4.9b from tower sale

KUALA LUMPUR: Axiata Group Bhd’s Indonesian subsidiary is looking to raise 14 trillion rupiah (RM4.9 billion) by selling 7,000 of its telecom towers next year, a top official was quoted as saying by the Jakarta media.

Goldman Sachs had been appointed to arrange the planned tower sale, Hasnul Suhaimi, president director of PT XL Axiata Tbk, was quoted as saying by the Jakarta Globe in a report on Wednesday.

“We are going to sell [the towers] anyway because we want to focus on our core business,” Hasnul reportedly said. “So far, no one has expressed interest.”
XL’s tower leasing business generated 700 billion rupiah in revenue in 2010, 4% of the total revenue for the year, according to the report. XL — the largest
contributor to Axiata’s earnings alongside Celcom Axiata Bhd — owns about 10,000 towers.

Hasnul reportedly expects XL’s revenue growth to slow to 7% this year or 18 trillion rupiah, down from 27% growth last year, citing market saturation. XL’s capital expenditure, however, is set to rise 20% next year to six trillion rupiah as the company prepares its network to handle more data usage, he said.

“The tower sale would be positive for XL as it would generate cash flow which can be used to finance expansion,” an analyst with Kim Eng Securities in Indonesia wrote in a note yesterday.

XL isn’t the only one looking at monetising its tower assets. The analyst said rival operator PT Indosat Tbk, too, had earlier this month signed a memorandum of understanding with Indonesian tower operator PT Tower Bersama Infrastructure Tbk for the sale of Indosat’s 4,000 towers.

The Kim Eng analyst also said the expected 14 trillion rupiah proceeds from XL’s planned exercise works out to about US$222,000 (RM7.1 million) per tower, “much higher” than the estimated US$125,000 per tower on Indosat’s planned tower sale. XL expects its subscriber base to reach 49.5 million by year-end from about 45 million currently.

In an interview with The Edge earlier this year, Axiata group CEO Datuk Seri Jamaludin Ibrahim said the group was open to disposing of its tower assets, if it could sell the tower leasing business at higher multiples than what the business is raking in for the company.

Axiata added 22 sen or 4.64% to close at its day-high of RM4.96 yesterday, while XL rose 0.54% to 4,625 rupiah. Axiata is set to release 3Q results on Nov 30.

next wed results would be out