Indosat Ooredoo is raising money to fund network improvements in a way that has become very familiar to the telecoms space in recent years: it is selling off passive infrastructure.
The Indonesian operator has brokered a deal to sell some 4,200 telecommunications towers to digital infrastructure investment group Digital Colony for US$750 million. The deal naturally carries a leaseback element to enable the telco to carry on using the towers.
Indosat Ooredoo inked the deal with Digital Colony’s Edge Point Indonesia unit, following a competitive tender process. The companies expect it to close in the second quarter of this year, subject to the rubber stamp from Indosat’s shareholders at an EGM due to take place in early May.
The transaction has been a long time in the planning and is in line with Indosat Ooredoo’s turnaround strategy, according to company president and CEO Ahmad Al-Neama.
“The deal marks the third and final sale of assets from Indosat Ooredoo’s high-quality tower portfolio that moves us towards a more asset-light model and greater focus on delivering outstanding mobile digital services to our customer[s],” Al-Neama said.
Indosat Ooredoo signed two simultaneous towers deals in October 2019, offloading 2,100 sites to Mitratel and a further 1,000 to Protelindo for a total consideration of 6.39 trillion rupiah, or about $440 million at current exchange rates. At the time, Al-Neama said the deal would help Indosat improve its customer service.
Boosting customer experience is still on its radar. This latest deal with Digital Colony will enable Indosat to improve network performance and launch “innovative new digital solutions to enhance the customer experience,” it said.
“We are confident that the leaseback agreement, with its attractive terms, will continue to meet our ongoing tower needs, while the capital that we have unlocked will provide further fuel to power our growth momentum in 2021,” Ahmad Al-Neama.
And after all the carefully-chosen words around customer experience, service innovation and so forth, that’s really what this is ultimately all about: freeing up capital. Telcos have a lot of money tied up in their passive infrastructure and most of them are now looking at setting it free.