Premier Insight : TOWR, visit takeaway
Thursday, May 16, 2019       09:19 WIB

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Sarana Menara ( IJ; Rp715; Not Rated) visit takeaway
targets net-additional tenants of 2.9-3K tenants. The net-additional tenants (orders) comes from and Indosat (both for outer Java) and Hutchinson Tri (Java area). 1Q19 additional tenants were affected by (one off) subscription discontinuation from Internux (officially stopped service after inability to pay spectrum license based on news in January 2019). Excluding impact from Internus, we estimate 1Q19 additional tenants (net) of 892 tenancies in 1Q19 (c.30% of company's FY target), assuming all else the same.
has received tower lease renewal extension 10-year contract for 9K leases (mainly from Hutchinson c.6K leases, followed by and ) with rental rate aligned with its average current tower rental of Rp12-13mn/tenant.
views current tower rental rate of Rp12-13mn/tenants is likely to sustain (no longer to be cheaper) considering less competition from small tower providers. This is supported by several M&As recently done by big tower operators: acquired KIN (c.1.5K towers in FY18) in Jun 2018; took control of following 2 tower companies in 4Q18 (PT Visi Telekomunikasi Infrastruktur ( IJ) and PT Gihon Telekomunikasi ( IJ) - both added 1.1K tenancies and 859 sites).
trades at 2019 EV/EBITDA of 8.7x, similar to at 8.5x. (Company).


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