It will be a sale and leaseback agreement with Edgepoint Indonesia’s unit, PT EPID Menara AssetCo, said Indosat.
Edgepoint Indonesia was declared the winning bidder of a competitive tender process conducted by Indosat Ooredoo. Edgepoint is owned by Digital Colony, headed by Marc Ganzi (pictured), who appeared virtually at the signing ceremony today.
This is the second major acquisition by Digital Colony this month. At the start of the month it spent $854 million on Boingo Wireless, which joined a portfolio that already includes FreshWave, Highline do Brasil and 50% of Zayo.
The transaction is expected to close by the end of the first half of the year, said Indosat, “subject to customary conditions, including shareholder approval by Indosat Ooredoo”. Shareholders will meet on 6 May to consider the deal.
If it is agreed, Indosat Ooredoo will lease back space on the towers for a period of 10 years to meet its ongoing requirements. The purchase price represents an average $179,000 per tower.
Ahmad Al-Neama, president director and CEO of Indosat Ooredoo, said: “I am delighted that Indosat Ooredoo has agreed this deal with Edge Point Indonesia, which has been long in the planning and is in-line with our turnaround strategy to create more value for shareholders and customers.”
Suresh Sidhu, who joined Edgepoint as CEO from Asian infrastructure company Edotco last year, said: “This deal is one of the largest of its kind in Asia and cements our position as a leading tower provider in Indonesia. We are delighted to have further strengthened our strategic partnership with Indosat Ooredoo, which has been developing over several years. The addition of 4,200 towers to our portfolio will help to create significant value for all our stakeholders.”
Capacity’s report in November 2020 said that Edgepoint planned to buy “20,000 to 50,000 towers in the next five to seven years, with possible equity capital commitments from Digital Colony and its partners of $1 billion or more.”
Indosat said the tower sale “will unlock capital to build on Indosat Ooredoo’s strong growth momentum through further improvements to its network performance and the launch of innovative new digital solutions to enhance the customer experience.”
In February the Ooredoo group reported declines in handset sales and roaming income, which saw the group revenue decline 4% in 2020, while group net profit attributable to Ooredoo shareholders decreased by 35%.
However Indosat Ooredoo recorded a full year revenue increase of 6.9% on the previous year as cellular revenues also increased, by 11.6% year on year.
The group said today: “The [tower] sale is part of Indosat Ooredoo’s turnaround strategy, which has refocused the business on digital products and services and sought to create optimal value from its infrastructure. Monetizing its quality portfolio of telecommunications towers is a key pillar of Indosat Ooredoo’s current strategy.”
Al-Neama 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.”
