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XL Axiata sell 2,500 towers to Protelindo for $267m


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JAKARTA (TheInsiderStories) – Indonesian telecommunication provider PT XL Axiata Tbk (IDX: EXCL) announced it has signed an agreement to sell 2,500 units of its telco towers for 3.57 trillion rupiah ($267.22 million) to PT Profesional Telekomunikasi Indonesia (Protelindo), unit of PT Sarana Menara Nusantara Tbk (IDX: TOWR).

The company also explained  it had signed a deal with Protelindo, to rent 2,432 of the towers as the anchor tenants for 10 years. The deal is expected to be concluded by June 30.

President director and CEO of XL, Dian Siswarini said,“Unlocking value 2,000 – 2,500 towers will complete H1. Our goals to strengthening our business and other investment. We have seen solid progress and momentum with our transformation agenda launched in 2015. In addition, we have proactively embarked on balance sheet management Initiatives to strengthen our financial position and reduce exposure to foreign exchange volatility.”

Previously rating’s agency Moody’s Investors Service recently said, said XL Axiata sell up to 2,500 tower units by mid-year could be a “credit positive” for the company but noting that the move would boost its liquidity.

XL Axiata, the country’s third-largest network operator, recently announced a plan to sell between 2,000 and 2,500 towers by mid-year through an open auction in order to pay off its debt. Several local tower operators, among which are PT Tower Bersama Infrastructure Tbk (IDX: TBIG) and Sarana Menara Nusantara, have shown their interest in acquiring the towers.

The company currently has a Ba1 ratings, which is the lowest notch in investment grade ratings, with a stable outlook. Nidhi Dhruv, an assistant vice president at Moody’s, said the plan “will allow the company to monetize [on] its non-core tower assets, which will in turn improve its liquidity profile.”

Proceeds from the sale could also help fund XL Axiata’s operations this year as the company’s current cash levels remain “insufficient” to cover estimates of a Rp 7 trillion ($507.26 million) budget in capital spending, as well as dividend payments of approximately Rp 500 billion and debt maturities of Rp 4.3 trillion, Moody’s said.

XL Axiata’s cash sources currently at Rp 3.3 trillion of cash on hand, with expected cash flow from operations of approximately Rp 7.5 trillion in the next 12 months, according to Moody’s.

Still, at the same time, the move would place a slight pressure on XL Axiata’s margins as revenues from the company’s tower leasing operations, which have higher margins, decline following the sale, according to Dhruv.

“The company is also likely to continue facing foreign-exchange pressures on margins,” Dhruv said in a statement. “Nonetheless, it has achieved early success in raising prices, and could gain further traction through management’s commitment to focus on higher [average revenue per user] customers and prudently priced data packages.”

The network operator, a local affiliate of Malaysia’s Axiata Group, reported a Rp25.3 billion last year compared to Rp 803 billion in the year before, largely due to Rp 2.5 trillion foreign exchange losses. Meanwhile, revenue declined 2.5 percent to Rp 23 trillion.

XL Axiata saw its total subscribers decline by about 30 percent to 42 million last year amid the company’s move to clean up its inactive subscriber base, increasing the company’s blended ARPU to Rp 34,000 last year from Rp 26,000 in 2014.

The third largest telecom company in Indonesia which is 66.45 owned by Malaysia’s Axiata Group has raised $500 million from rights issue. The proceeds from this issue will be used to service the shareholder loan.

“The rights issue is an important step in strengthening our foundation as we embark on the next chapter in our transformation agenda. Net proceeds from the rights issue will be used to repay our U.S. dollar denominated shareholder’s loan,” Dian said.

The company also announced its audited results for the 2015 financial year ended 31 December 2015. XL Axiata posted its third consecutive quarter of revenue growth with 2 per cent quarter-on-quarter (QoQ) in fourth quarter 2015 driven by growth in the core usage revenue of 2 percent QoQ with a solid performance by the Data (up 15 percent QoQ) segment.

Dian said “We have ended 2015 on a positive note with further improvements in our operating and financial performance and we hope to build on the foundations we have laid this year and deliver a stronger performance in 2016.”

“The biggest improvement was in earnings before interest, tax, depreciation and amortization (EBITDA) which increased 6 per cent QoQ to Rp2.3 trillion resulting in an EBITDA margin of 39 per cent up 1 percentage point QoQ,” she noted.

The increase was mainly due to positive impacts from the reshape of the customer base to focus on the more profitable subscribers as well as efforts to improve profitability of the product portfolio. This is also the third consecutive quarter of EBITDA and EBITDA margin improvement.

Data traffic grew by 54 per cent YoY in 2015 compared with the same period last year with total data users at 22.5 million or 54 percent of the total base.

The growth of smartphones has successfully driven the increase in Data adoption in Indonesia. XL’s smartphone penetration has grown to 42 per cent of its base as at end 2015. XL smartphone users grew 10 per cent YoY and reached 17.7 million users in the year.

Online e-commerce portal Elevenia has raised $50 million in its latest funding round led by Indonesia’s second largest mobile operator PT XL Axiata Tbk, with participation from SK Planet — a subsidiary of South Korea’s largest mobile carrier SK Telecom.

The total amount of investment in Elevenia to date stands at approximately $110 million. The company had earlier received two rounds of funding – $36.6 million in 2014 and $12 million in January 2015.

According to Elevenia CEO, James Lee, Elevenia managed to wrap up the transaction value of Rp1.3 trillion ($92.93 million) last year. “Given our success last year, our investors re-added investment at the beginning of this year, totaling $ 50 million dollars. This additional investment is proof that the share holder we are very serious in working on e-commerce market of Indonesia, through elevenia,” he added.


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Source: The Insiderstories
XL Axiata sell 2,500 towers to Protelindo for 7m

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